Macroeconomics involves the study of how the limited resources are utilized by a whole economy in production of goods and services for consumption. Economies can be those of state or even the world. The overall decisions concerning the economic factors affecting the whole economy are made. The economic factors affecting the state include the total national earning, the rate of employment, inflation and deflation rates and the total worth of the goods and services produced in the state among others.

Micro-foundations of macroeconomics refers to the movement of the individuals in an economy which support the macroeconomic model. Working out the micro-foundations of a macroeconomics model is important because the economic movement at the aggregate level come out as a result of the behavior of the individuals. For a microeconomic model it is important to base on the microeconomic foundations as compared to basing on past trends because estimation which is an unreliable estimator especially when some policy changes are made is avoided.