According to R.G.D.Allen, the term ‘Macro economics’ applies to the relation amongst broad economic aggregates. It is the study of aggregates such as total employment, unemployment, national income, national output, total investment, total consumption, etc.

The emergence of modern Macro economics got a turning point in 1936 when J.M.Keynes published his book, ‘The General Theory of Employment, Interest and Money’. The economic thoughts before 1930, were dominated by classical economists like Adam Smith, J.B.Say, and others. They had maximum faith on Laissez Faire policy i.e., minimum intervention of Government. More scope was given to free economic activities and invisible hands to ensure equilibrium and full employment.

In 1930, USA had to face a great economic depression, which proved that the classical economic policy is wrong and necessitated the new economic policies and interpretation and analysis of Macro-economics. J.M.Keynes gave a fresh and revolutionary approach through his book ‘General Theory’. Macro economic approach came into existence during this juncture. The same was supported by neo-classical Macro economics, supply side economics and neo- Keynesian economics.