This document provides an introduction to basic macroeconomic concepts. It defines macroeconomics as being concerned with the behavior and functioning of the entire economy rather than individual components. It discusses how macroeconomics analyzes relationships between aggregate economic variables and uses tools like aggregate demand and aggregate supply. The document also notes that while microeconomics and macroeconomics were once seen as distinct, economists now recognize their interdependence, as changes at the micro level can impact the macro level and vice versa. It concludes by defining some basic macroeconomic concepts like the components of economic activity and the distinction between flow and stock variables.

1. Introduction To Macroeconomics Basic Concepts

2. What is Macro Economics? Concerned with the behavior or Functioning of the entire economy Aggregate Variables Analyses relationship between economic aggregates Basic tools used in Macroeconomic Theory- Aggregate Demand and Aggregate Supply Solution to Problems-Govt.Policy Decisions

3. Interdependence between Micro and Macroeconomics Post 1970s Economists-the two branches are not entirely different Foundations or underpinnings of macro economic theory are in microeconomics. Changes in the wage rate in an Industry affects the general wage rate of the economy Impact on the overall employment and output levels

4. Basic Concepts Economic Activities- (i) Production–Production units-large and small Ownership – Private Sector and Govt. (ii) Consumption- (iii) Capital Formation – Excess of Production over Consumption Production = Consumption + Investment Flow Variables-measured over a period of time Examples- National Income variables Stock variables- measured at a particular point of time . Example- Company’s Balance sheet, Money Supply