ACC 105- Principles of Economics in Accounting

Macroeconomics is the study of the behaviour of the economy as a whole and hence the determination of broad economic aggregate such as national income or national product, employment, the price level and the exchange rate, balance of payments position, booms, recessions and depressions etc. To study the overall performance of the economy, macroeconomics focuses on the economic policies and policy variables that affect performance, including monetary and fiscal policies, the stock of money and interest rate, the federal government budget, federal or public debts etc. it deals also with the forces or factors which determine the levels of these aggregate as well as the structures or components of some of these aggregate or averages. Thus, macroeconomics theory refers to the analysis of the hypothesized relationships between aggregate variables in the economy, such as national consumption, savings, income, employment, export, and imports. Macroeconomics was first introduced by RAGNAR FRISCH in 1933 during the period of great economic depression globally applies to the study of relations between broad economic aggregate. In 1936, macroeconomics was brought into prominence through the agitations and questioning of JOHN MAYNARD KEYNES in his work titled: the general theory of employment, interest and money. This breakthrough subsequently gave rise to Keynesian cross which is now referred to as Keynesian economics. The goal of macroeconomics is broadly the national objectives which can change from time to time depending on the economic fortunes of a particular country. Generally, such objectives include: