Macro Economics Essay
Definition of ‘Macroeconomics’ The term Macro has been taken from the Latin word Macros which means big. The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics Concerns Production Prices Income Employment National Production/Output Total Industrial Output Gross Domestic Product Growth of Autobiographer Price Level Consumer prices Producer Prices Rate of Inflation National Income Total wages and salaries
Total corporate profits Employment and Unemployment in the Economy Total number of Jobs Unemployment rate Therefore, as is clear from the above, the following issues/subjects define the scope of Macro Economics: 1. Aggregates of national income and its determination 2. Theories of Income and Employment. 3. Theory of Money and Banking. 4. Fiscal Theory. 5. Balance of Payment. Scope and Importance of Macro Economics Macro Economics is of much theoretical and practical importance. Let us see what are the importance and the scope where macro economics are being used. . To Understand the working of the Economy The study of macro economics variables is requisite for considerate the operation of the financial system. Our main economic complexities are associated
Need essay sample on "Macro Economics"? We will write a custom essay sample specifically for you for only $ 13.90/page
Modern Governments, particularly, the underdeveloped economies are confronted with innumerable national problems. They are the problems of over population, inflation, Macro Economics By bodybuilders these governments rests in the regulation and control of over population, general prices, general volume of commerce, general productivity etc. I. In General Unemployment Redundancy is caused by deficiency of effectual demand. In order eradicate it, effective demand should be raised by increasing total investment, total productivity, total income and consumption.
Thus, macro economics has special significance in studying the causes, effects and antidotes of general redundancy. It. In National Income The study of macro economics is very significant for evaluating the overall performance of the economy in terms of national income. This led to the construction of the data on national income. National income data help in anticipating the level of fiscal activity and to comprehend the distribution of income among different groups of people in the economy. Iii.
In Economic Growth The economics of growth is also a study in macro economics. It is on the basis of macro economics that the resources and capabilities of an economy are evaluated. Plans for the overall increase in national income, productivity, employment are rammed and executed so as to raise the level of fiscal development of the economy as a whole. ‘v. In Monetary Problems It is in terms of macro economics that monetary problems can be analyses and understood properly. Frequent changes in the value of money, inflation or deflation, affect the economy adversely.
They can be counteracted by adopting monetary, fiscal and direct control measures for the economy as a whole. V. In Business Cycle Moreover, macro economics as an approach to fiscal problems started after the great Depression, thus its significance falls in analyzing the grounds of fiscal variations and in providing remedies. . For Understanding the Behavior of Individual Units For understanding the performance of individual units, the study of macro economics is imperative.
Demand for individual products depends upon aggregate demand in the economy. Unless the causes of deficiency in aggregate demand are analyses it is not feasible to understand fully the grounds for a fall in the demand of individual products. The reasons for increase in costs of a specific firm or industry cannot be analyses without knowing the average cost conditions of the whole economy. Thus, the study of individual units is not possible without macro economics.