Emergence of Macro Economics

Classical Economics is the most popular thought of economics before the emergence of Macro Economics. All who are willing to work will get employment and all firms will work at full efficiency. This thought is known as Classical Economics. It was in 1929, the great depression happened. The Great Depression was a severe worldwide economic depression. It was the longest, deepest and most widespread depression of the 20th century. It started in 1929 and lasted 1933. The depression originated in the United States, after the fall in stock prices that began around September 4, 1929. It became worldwide news with the stock market crash of October 29, 1929. The day is known as Black Tuesday. During great depression, the production and employment in Europe and North America is declined. As a result, the market demand of goods decreased, factories stopped functioning and employers lost their work. The unemployment existed in economy needs new theories for overcoming the situation. The book of J.M.Keynes is mainly focused on this direction. Global Recession in 2008 is the worst financial crisis since the Great Depression of the 1930s.

Sectors handled by Macro Economics

The Sectors handled by Macro Economics can be mainly divided into four - Firms, Household, Government and External Sector.

1. Firms Sector - The most important sector of Economy is Firms Sector. It is the sector where products and services are produced and distributed in Market. It is the government sector where not only creating the job opportunities but also responsible for paying taxes.

2. Household Sector - It is the second important sector of economy. It is also called as Consumption Sector. It is the economic sector that consists of a person or organisation of persons. This sector's income is mainly used for consumption, earnings and paying taxes to Government.

3. Government Sector - In a Capitalist Economy, the involvement of government is less. The Government will create infrastructure for economic growth and also performs as a motivating force for economic growth. Imposing Taxes, the development of social and economic basic sectors like education and health, the purchasing of products and services from firms, giving subsidy for the development of Agriculture and Industry etc.. are the duties of Government.

4. External Sector - The Sector that does not comes under domestic border of a country is known as External Sector. All Modern Economies are exactly the Open Economy. The import and export of products and services are common in this sector. There are two types of International trade - Export and Import. If a country sells product maked from domestic economy to other nations, it is called as Export. If a country buys products from other countries that are needed for domestic economy, it is called as Import. The capital from foreign countries to domestic economy and domestic economy to foreign countries is flowing. It is called as Capital flow.

Economic Agents

The financial decisions taken by persons or companies are mainly called as Economic Agents or Economic Units. They may be producers or consumers. These agents also take decisions on how many money should Government, Corporation, Banks etc. should spent. Also there are companies which are working as Economic Agents. They take decisions on how many interest should be imposed, how many tax to collect etc.