Macroeconomics is the study of economic phenomena that affect the entire economy, such as inflation, unemployment, economic growth, interest rates, and inflation. In other words, macroeconomics deals with aggregate economic magnitudes.

Differences between Macroeconomics and Microeconomics

Unlike microeconomics, which studies individual behavior, macroeconomics examines the economy as a whole, seeking to explain changes that affect households, businesses, and markets collectively. The three central variables of study in macroeconomics are production (GDP), inflation, and unemployment.

Because the economy is made up of a set of businesses and households that interact in multiple markets simultaneously, microeconomics and macroeconomics are closely related. In fact, much of contemporary macroeconomics is based on microeconomic concepts to try to explain large trends, a field known as microfounded macroeconomics.

Some economists argue that the difference between microeconomics and macroeconomics is not that microeconomics deals with the small scale and macroeconomics with the aggregate, but rather in what each discipline considers as an individual. Microeconomics views individuals as households and businesses, while the unit of study in macroeconomics is the national economy as a whole.