That part of economics which is primarily concerned with the study o(relationships between broad economic aggregates, the most important of which are national income, aggregate saving and consumers’ expenditure, investment, aggregate employment, the quantity of money, the average price leve! and the balance of payments. It is largely concerned with explaining the determinants of the magnitudes of these aggregates and of their ra tes of change through time. A major preoccupation is also the role of government expenditure , taxation and monetary policy in determining the general leve! of economic activity. Macroeconomics proceeds by defining and analysing in some depth relationships between the aggregates, finding the conditions under which the system is in static or dynamic equilibrium and noting the characteristics of the equilibrium state. This then enables predictions to be made about the consequences of changes in certain key magnitudes, e.g. the leve! of investment or government expenditure. Modem macroeconomics largely dated from the publication of Keyne’s The General Theory of Employment, Interest and Money in 1936.
Reference: The Penguin Dictionary of Economics, 3rd edt.
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