Macroeconomics deals with the aggregate economic variables of an economy. It also takes into account various interlinkages which may exist between the different sectors of an economy. This is what distinguishes it from microeconomics, which mostly examines the functioning of the particular sectors of the economy, assuming that the rest of the economy remains the same.
Macroeconomics emerged as a separate subject in the 1930s due to Keynes. The Great Depression, which dealt a blow to the economies of developed countries, had provided Keynes with the inspiration for his writings. In this book, we shall mostly deal with the working of a capitalist economy.
Hence it may not be entirely able to capture the functioning of a developing country. Macroeconomics sees an economy as a combination of four sectors, namely households, firms, government and external sector.
