What is Macroeconomics?

By Dylan Jomy2 min read · Posted Mar 4, 2023


Whenever discussing the topic of economics, the term “Macroeconomics” is mentioned often. This article will go over what Macroeconomics is and what factors affect it.

What is Macroeconomics?

Macroeconomics is a branch of economics that studies how the overall economy behaves. It goes over topics such as gross domestic product, inflation, changes in unemployment, and interest rates. Macroeconomics is crucial for the government to understand and predict the long-term effects of its actions.

Factors that affect Macroeconomics

Gross Domestic Product: GDP is the primary macroeconomic indicator. It refers to the economy's size at a point in time. GDP usually calculates how the economy is doing and is released by the government on a quarterly or annual basis. An increase in GDP means that the economy is doing well.

Inflation: Inflation is the increase of overall price levels and the decrease in purchasing power. It primarily occurs due to increased demand for products and services, which raises prices. Inflation represents growth. However, inflation is also harmful if the purchasing power decreases much more than inflated prices, reducing overall spending and currency, which affects the economy.

Unemployment: Unemployment accounts are for individuals who are jobless and are seeking employment. Individuals who are retired or disabled are not considered unemployed. Since employment is directly related to economic output, it is a good indicator of economic conditions. “Actual unemployment” is helpful to indicate the economy’s short-term needs, while “natural unemployment” can identify trends in the long term.

Interest Rates: Interest rates are the return the borrower pays from lending. Since interest rates influence consumer decisions, it is a valuable tool for controlling economic activity. When interest rates are high, borrowing becomes more expensive, so consumers reduce spending. Similarly, it is cheaper to borrow when interest rates are low, so consumers will spend more.


Macroeconomics mainly focuses on a country's Gross Domestic Product while also studying economics and how it is generally affected in economies as a whole.


About The Author

Dylan Jomy


Hi, I am Dylan, an Article Editor at Pitch Labs! I am fascinated by business, finance, and the stock market. I also love to write, help, and inform people about economics-related topics. I plan to educate myself on business and STEM-related matters as well.

See more posts by Dylan Jomy



Join Our Community

Looking for something else? Get your questions answered in our free online learning community!

Entrepreneurial Resources

Jumpstart your next business with our free resource library.



Our organization cannot give out official legal/fiscal guidance. All articles are written by volunteers and it may be beneficial to contact professionals to assist your understanding of the information and to guide your action. Pitch Labs bears no responsibility for the results of actions taken based off of article content or any other form of assistance given.