Key Distinction from Microeconomics

Having seen how macroeconomics emerged and what kind of economy this book studies, it helps to state in one place exactly what sets macroeconomics apart from the microeconomics you studied earlier.

Microeconomics mostly examines the functioning of a particular market or sector of the economy — a single good, a single industry, a single group of buyers and sellers — while assuming that the rest of the economy stays unchanged. Macroeconomics does the opposite: it deals with the aggregate economic variables of the economy — total output, total employment, the general price level, and so on — and it explicitly takes into account the interlinkages between the different sectors, because a change in one part of the economy usually affects the others.

That is the essential distinction. This book, part of the CBSE Class 12 Introductory Macroeconomics course, studies the working of a capitalist economy through these aggregate variables and the links between households, firms, the government and the external sector. Because of this focus it may not fully capture the working of a developing economy, but it provides the framework needed to understand how a modern economy behaves as a whole.