The term Macro has been taken from the Latin word Macros which means big. In this way, the study of various economic aggregates is called Macro Economics.
In short, Macro-economic theory is the study of economic aggregates, wherein economic relations between various aggregates of an economy such as total employment, aggregate demand, national income, total savings, total investment etc. arc studied. This study is based on the principle of aggregates wherein aggregates of various units arc expressed as a variable. The determination of level of employment and national income is a part of the subject matter of Macro Economics.
In the words of Shapiro, “Macro Economics deals with functioning of the economy as a whole.”
According to Prof. Boulding, “Macro Economics deals not with individual quantities as such but with aggregates of the quantities, not with individual incomes but with the national income, not with the individual prices but with the price level, not with the individual output but with the national output.”
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Therefore, as is clear from the above, the following issues/subjects define the scope of Macro Economics:
1. Aggregates of national income and its determination
2. Theories of Income and Employment.
3. Theory of Money and Banking.
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4. Fiscal Theory.
5. Balance of Payment