Summary

Macroeconomics deals with aggregate economic variables — the totals and averages for the economy as a whole, such as overall output, the general price level and total employment — rather than the price or output of any single good. Studying the country's economy as a whole is the central concern of the NCERT Class 12 Introductory Macroeconomics course.

It differs from microeconomics in scope. Microeconomics examines the functioning of particular markets or sectors, assuming the rest of the economy stays unchanged; macroeconomics instead looks at the whole economy and takes explicit account of the interlinkages between its different sectors.

The decision-makers are different too. Microeconomic choices are made by individual buyers and sellers pursuing private profit or welfare, whereas macroeconomic policy is set by the State and statutory bodies such as the RBI and SEBI, pursuing public goals laid down by law or the Constitution.

Macroeconomics emerged as a separate subject in the 1930s, through the work of Keynes. The prevailing classical tradition had assumed the economy was self-correcting and always tended towards full employment. The Great Depression of 1929, which caused output and employment to collapse across Europe and North America, overturned that belief and inspired Keynes's 1936 General Theory — the birth of modern macroeconomics. …