Ryan Elantri is majoring in Economics at The Pennsylvania State University and plans to pursue a career in the financial services sector following graduation. Macroeconomics is one of the fundamental concepts that students of the subject must come to grips with if they are to succeed in their later studies.
The following is a basic explanation of the concept and how it is applied.
What is Macroeconomics?
Macroeconomics is the study of how the aggregate economy behaves and is considered an essential branch of economics. It involves the study of a number of economy-wide phenomena that have potentially enormous effects on a country-wide scale. Such phenomena include price levels, inflation, variances in unemployment levels, national income and the rate of growth of various countries.
How Is It Applied?
The theory behind macroeconomics is usually applied through macroeconomic policy. This will be done using two sets of tools: monetary and fiscal policy. In both cases, the policies that are put in place are intended to stabilize a wider economy by countering or adapting to one of the previously mentioned phenomena. For example, a macroeconomic policy may involve boosting the gross domestic product of a nation so that it stays consistent with what would be expected with full employment.
Define Macroeconomic Stability?
The aim of macroeconomic policy is to help a country gain stability. In this context, that means that the nation is as protected as possible from the external phenomena that are mentioned above. Minimizing the impact of such phenomena offers the country in question increased chances of obtaining sustainable growth.
Ryan Elantri is an Economics major at The Pennsylvania State University.