What is Macro Economics?

January 18, 2021


What is Macro Economics?

The Macro Economics we study how these aggregates and averages of the economy as a whole are determined and what causes fluctuations in them. In Macro economics we study how an economy grows. Macro economics is also called the national income, employment and rate of interest.

http://www.zcomb.com/wp-includes/js/tinymce/plugins/wordpress/img/trans.gifIn Macro economics the concept of national income, it determination and distribution, total output, aggregate consumption, aggregate savings, aggregate investment, aggregate demand, aggregate supply and rate of interest are discussed. In Macro Economics we discuss generally the following:

Theory of Income Employment and Rate of Interest

In this part the concept of national income, its determination, relationships between income and consumption, investment, rate of interest and savings are studied. Principles of multiplier and acceleration are explained

Theory of Trade Cycle

The problems arising due to fluctuations in price level e.g. inflation, deflation, depression are discussed.

Money Theory

The problems relating to determination of value of money, demand for money and supply of money are studied.

Theory of International Trade

The problem relating to international trade e.g. exchange rate, exchange control, tariffs, quotas, protection, economic order and balance of payment etc. are discussed.

Merits of Micro Economics 

1.     The most modern, theories of economics planning and economic development are studies in macro economics.

2.     Some decisions cannot be made at individual level e.g. increase in wage rate, taxation system and changes in rate of interest.

3.     Most of the economic problems of the present time e.g. unemployment high growth rate of population, adverse balance of payments, inflation, depression and low rate of economic development and economic growth are studied only in macro economics.

4.     For economic stability the policies can be framed at national level.

Demerits of Macro Economics 

1.     In the boom period when most of the firms are earning profits there may be some firms which are facing losses.

2.     If an individual unit is not working efficiently it cannot be seen in macro economics e.g. while studying aggregate saving and investments it is not possible to find out where the savings and investment rate is high and where it is low.


You Might Also Like