Macroeconomics: Let's Get to Know the Definition, Purpose, Shape, Scope, and Problems

Do you know what macroeconomics is, which is one of the most important branches of economics? In this case, macroeconomics is a component that has the power to influence various policies.

Including labor, price stability, and national business growth. From this, it is clear that understanding what macroeconomics is is very important. Check out the full explanation below!

Definition of Macroeconomics

Macroeconomics, also known as macroeconomics is a field of research that studies the economy as a whole and as a whole.

However, Adam Smith, the father of economics, said that macroeconomics is an attempt to analyze phenomena or events that are usually to find out their causes and effects.

In addition, macroeconomic issues cover topics such as inflation, unemployment, national development, national income, GDP, price levels, etc.

In addition, macroeconomics is also used to study the flow of income circles, which are the circulation of money and goods between two or more economic actors. The income loop flow shows the behavior of consumers who use their income to buy goods and services produced by producers.

The concept of macroeconomics deals with the entire economy, which allows us to know how well a country's economy is healthy. The government can use this concept as a reference for taking macroeconomic policies to grow.

Macroeconomic Objectives

As previously mentioned, the concept of macroeconomics is the study of the economy as a whole, including factors such as inflation, unemployment, poverty, and others that can hinder economic growth.

So, tackling this economic problem is the goal of macroeconomics. These are some macroeconomic goals:

1. Creating Job Opportunities

To solve the unemployment problem, the government will issue macroeconomic policies to create jobs.

This is done because very high unemployment still exists in a country, which will hinder economic growth. 

The government can reduce the unemployment rate by issuing policies that create jobs.

2. Increasing National Production

National income can be affected by low domestic production. Therefore, to increase the economic growth and development of a country, increasing domestic production is one of the macroeconomic goals.

3. Creating a Stable Economic Situation

Making the economy stable is the next goal of macroeconomics. To achieve this, the government will try to stabilize the price of goods, employment, and people's income levels.

It will benefit the country if the economy is stable.

4. Balancing the Balance of Payments

The stability of the trade balance is one of the factors that drives a country's economic growth. To increase the country's foreign exchange coffers, the government will try to balance the balance of payments by increasing export activities with other countries.

5. Equalize Community Income

This is an additional macroeconomic goal related to leveling people's incomes. This can be achieved through equal distribution of processed human resources and natural resources.

By increasing people's income, people's level of buying and selling will increase, eliminating social inequality, resulting in a safe and peaceful life.

6. Controlling Inflation

Inflation is one of the most common economic problems in a country. This occurs because there is an excessive demand for a commodity, which causes its price to rise.

To stop the rate of inflation, the government will apply a cash ratio policy, open market politics, and discount politics in the macro economy.

Forms of Economic Policy 

As previously mentioned, policies are made using macroeconomic practices. Some examples of macroeconomic policies are as follows.

1. Financial Policy

Monetary policy is the first policy that establishes the difference between macro and micro economics. In practice, Bank Indonesia acts as the national central bank.

Monetary policy is government action that influences aggregate spending, from changing the supply or circulation of money to raising interest rates.

In short, monetary policy aims to measure the amount of funds issued by the country's central bank. This is because the circulation of central bank money affects whether inflation rates are high or low.

Therefore, one of the functions of monetary policy in macroeconomics is to ensure that a country's economic growth rate remains stable.

2. Expenditure Policy

The government implements fiscal policy by regulating state income and expenditure to influence aggregate spending or the economy.

In macroeconomics, fiscal policy influences the distribution of income, the level of investment and other national incomes.

3. Policies Relating to Offers

Supply side policy, which focuses more on the balance of the country's or company's balance sheet, is the final policy in macroeconomics.

Supply-side policies also help businesses save more money and increase efforts to reduce household income taxes.

The government generally implements this policy by encouraging businesses to continue to innovate, use the latest technology, and develop high-quality products.

Scope of Macroeconomics

There are three main scopes of macroeconomics in its application, including:

1. Policies Made by the Government

Of the three government policies mentioned earlier, they are a form of government effort to overcome inflation, unemployment, and other macroeconomic problems.

2. Determining National Economic Conditions

In macroeconomics, the second scope is the ability of a country to produce products and services. It includes details on government spending, investment and business spending, household consumption, and exports and imports.

3. Overall Spending 

Aggregate, or overall, spending levels are the last topic to be discussed in macroeconomics. If the level of aggregate spending is not ideal, then other economic problems will arise.

Macroeconomic Problems

The implementation of macroeconomics also has an impact on a country's business climate and is often associated with the country's financial problems.

In addition, there are several macroeconomic problems that often arise. The first is a problem related to banking and credit; the second is a crisis in the exchange rate, both at home and abroad; and the last is a problem related to the business context related to economic growth.

It includes a full explanation of the definition of macroeconomics, as well as an explanation of the types of policies, their scope, goals and issues related to them. Understanding macroeconomics will really help you handle every situation and make decisions, both personally and in business.