The subject of economics deals with the economic issues. These economic issues could be on small scale and can also be on large scale. With the help of economics we mange how to fulfill our maximum needs in a limited resources. There are two main subdivisions of economics. One is microeconomics &other is macroeconomics. If it is on individual or small level then it is termed as micro economics. For example if an individual is managing how to fulfill his maximum needs in his/her limited salary then it comes in microeconomics. While macroeconomics is on larger scale. Provincial, National and global economic issues are solved in this type of economics. Macro economics is of great significance for the economic stability of a country and for the future economic growth of the country.
There are various different schools of thoughts in macroeconomics. Few of them are being discussed here.
• Classical school of thought,
• Keynesian school of thought,
• Monetarist school of thought,
• New Keynesian school of thought,
• Neoclassical school of thought,
• New Classical school of thought &
• Austrian school of thought.
Classical economic theory was put forward by Adam Smith who was known as the father of economics. Classical economists have to make sure that the flexibility of wages prices and rates. They also have to ensure that markets are clear every time. They have to make sure that there is zero percent unemployment.
Maynard Keynes’s work was the base of this school of thought. In this school of thought demand and supply chain balance is mentioned for the economic stability and growth of a country.
Milton Friedman’s work became the base of this school of thought. The major purpose of this school of thought is to maintain the inflation by monitoring the fund supply. Monetarists totally disagree with the Keynesian thought that the Government is able to control demand and it would be worthless to take such a step.
In new Keynesian an additional thing was microeconomics along with the previous Keynesian theory. Thus it would help a lot in understanding the minor technicalities too along with the major one. In this way betterment in economic cycle could be brought.
Neoclassic school of thought mainly emphasizes on microeconomics. According to that school of thought if economic models are based on microeconomics it would be easy to handle the economic issues.
New classical also emphasizes greatly on microeconomics.
Austrian school of thought considers mathematical exact calculation very appropriate step for sketching an economic model.