Question

1. Why do we study Macroeconomics?

2. There was no Macroeconomics or Microeconomics 100 years ago: there was one Economics. Why did it split--what happened?

Answer 1

Macro Economics is the study of the aggregate economy. An economy consists of various parties that participate in economic activities.It includes various business, industries , buyers , retailers etc that complete the economic ecosystem.

In short , aggregating all components and factors that play a major role in Micro Economics , form as the principles and fundamentals of Macro Economics.

There are a number of reasons to study Macro Economics.

1) It tries to reason how an interconnected economy works. ( Domestically and Globally)

2) It tries to determine level of income, employment and to find out National Income.

3) It tries to solve economic problems such as inflation , deflation , poverty , unemployment etc through Macro Economic policies.

4) It tries different methods to achieve higher levels of output, higher levels of GDP , Employment , Per-Capita Income and Economic Growth and Welfare.

5) Macro Economics helps policy makers to help them identify a broader sense of understanding economic problems.

Economists inorder to achieve economic growth and welfare, have split the study into two realms for the sake of better understanding on said matter's issues. They are ,  Macro Economics and Mirco Economics . One seeks to study individual decision making units in the economy ( Micro Economics ) and the other seeks to study the patterns of aggregate economic behaviour ( Macro Economics)  

Economists such as Adam Smith and Alfred Marshall were the ones who initially proposed the idea of Micro Economic Concepts such as Consumer Demand , Supply , Price etc . Thus the relevance of Micro Economic Study is pre-dated to the late 18th century.

As global trade increased among nations and after rapid industrialisation during early 20th century , there required a new ideology and concept that could integrate all producer efforts and could seek answers to new world's intergrated economic issues.

John Maynard Keynes , also known as father of Macro Economic Ideology , was recognised for his idea on government intervention on regulation of economy and its issues. He theorized on economic concepts such as 'Boom' and ' Bust' that can be countered by fiscal policy measures. His ideas and theories came into light after the Great Depression.

Thus the study of economics has changed its shape during the course of history and historical events that made such needed changes due to it.