Macroeconomics is a branch of economics that is defined in several economic scenarios. It is a branch of economics that cannot be avoided in the contemporary world. It determines the quantity of services and goods that can be produce. It determines the economic activity level of a given nation. It determines the unemployment and employment rates of a given nation. It determines the living standard of citizens of a given nation. It determines the causes of hiring and retrenchment of workers by firms in a given nation. Finally, it determines the causes of long term economic growth of a given nation.

There are two important policies that are used to determine the above described elements of macroeconomic. Monetary policy is controlled by the central bank of a given nation. It is subdivided into several policies such as financial capital markets, interest rates and bank lending policies. The macroeconomic fiscal policy is normally controlled by the legislative arm of the government. It aims at controlling the government taxes and its spending. Both monetary and fiscal policies are used by the government to correct all the economic challenges faced by a given nation.

It is however important to note that macroeconomics is different from microeconomics. While we have shown that macroeconomics describes economy of a given nation as a whole, microeconomics only focuses on some elements of the economy such as industries, firms and individuals.

Business managers should understand macroeconomics because it would enable them carry out their activities effectively. These business managers should understand the employment and inflation rates of their nations and even living standard of the citizens. This would enable them make decisions that are favorable to given economies.


OpenStax College. (2014). Principles of economics. Retrieved from