Macroeconomics is a field of economics that focuses on the big-picture trends and events that shape the global economy. It is the macroeconomic policies of governments, such as their spending, taxation, and regulation of markets, that help shape the economy’s performance and the peoples’ standard of living. Macroeconomics seeks to make sense of large-scale rise and fall of economic output, inflation, and unemployment, among other factors.

Macroeconomics examines the performance of a nation’s economy in terms of economic indicators such as unemployment rate, Gross Domestic Product, inflation rate, national income, and balance of payments. A broader concept of macroeconomic analysis also includes evaluation of the stability of economic exchange, direction of monetary and fiscal policy, and the impact of natural disasters or other catastrophic events on a region’s economic performance.

The two basic branches of macroeconomics are long-run and short-run analysis. Long-run macroeconomic analysis, or growth-oriented macroeconomics, offers a comprehensive picture of the economy’s potential given its current resources and technology, focusing on indicators such gross domestic product, balance of trade, and foreign investment. By contrast, short-run macroeconomics, or cyclical macroeconomics, is focused on analyzing and predicting short-term fluctuations in the economy related to business cycles. Such analysis looks to indicators such as the current unemployment rate, in addition to factors that may drive future fluctuations.

Macroeconomists use both econometrics and economic theory to analyze and inform their studies of the economy and its actors. Econometric techniques are concerned primarily with the quantitative analysis of data on economic systems, whether historical or contemporary. Through economic theories and models like the Keynesian model and aggregate demand model, macroeconomists develop theories that explain how the economy works, and how it might be affected by shifts in domestic and foreign economic policy.

In short, macroeconomics is the study of the overall performance of an economy- determining factors, dynamics, and potential solutions- it seeks to understand how and why an economy moves through cycles of expansion and recession and to find the best policies and practices to promote sustainable, equitable economic growth and stability.