What is macroeconomics?

Macroeconomics is the study of the behavior of the economy. The factors in this behavior covers level of deflation or inflation, employment levels, gross national product (GNP), etc. Macroeconomics handles economic growth, fiscal and monetary policies.It also covers consumption. There are two primary schools of macroeconomics: Keynesian and Monetarism.

Keynesian looks for solutions by concentrating on total demand, fiscal policy and monetary policy. Monetarism disagrees with fiscal policy as a way of managing the economy. It only believes in the importance of monetary policy for solutions.

Both of these schools of macroeconomics have now sprouted other movements, like New Keynesian Economics and New Classical Macroeconomics. There are huge consequences for investors within macroeconomics. Here is where the growth of the overall economy makes company earnings models very dependent.

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