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Understanding Macro Economics Essentials

Macroeconomics studies the overall averages and aggregates of an entire economy rather than individual components. It covers theories of national income, employment, money, prices, economic growth, and international trade. The study of macroeconomics is important for understanding the functioning of an economy, formulating economic policy, studying business cycles, and analyzing economic growth and price levels. While it ignores individual contributions, macroeconomics provides insights into the relationships between different sectors of an economy and aids international comparisons.

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Ajay Roy
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436 views9 pages

Understanding Macro Economics Essentials

Macroeconomics studies the overall averages and aggregates of an entire economy rather than individual components. It covers theories of national income, employment, money, prices, economic growth, and international trade. The study of macroeconomics is important for understanding the functioning of an economy, formulating economic policy, studying business cycles, and analyzing economic growth and price levels. While it ignores individual contributions, macroeconomics provides insights into the relationships between different sectors of an economy and aids international comparisons.

Uploaded by

Ajay Roy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

MACRO ECONOMICS

 Meaning
 Scope
 Importance
 Limitations
 Features
 Assumptions
 Relation between Micro and Macro Economics
 Difference between Micro and Macro Economics
Meaning of Macro Economics

 The word Macro has origin in Greek word Macros


which means large.
 So Macro Economics studies economic problems
from the point of view of entire economy.
 Boulding says, “Macro economic theory is that
part of economics which studies the over all
averages and aggregates of the system.”
 According to Shapiro, “ Macro economics deals
with the functioning of the economy as a whole.”
Scope of Macro Economics

 Macro economics covers followings:

I. Theory of National Income


II. Theory of Employment
III. Theory of Money
IV. Theory of general price level
V. Theory of economic growth
VI. Theory of international trade
Importance of Macro Economics

 Study of Macro Economics is very important due to


following reasons
a) Helpful in knowing the of functioning of an
economy
b) Study of National Income
c) Formulation of Economic Policy
d) Study of trade cycles
e) Change in general price level
f) Economic growth ………contd
t

 …….contd
 Helpful in study of Micro Economics
 International Comparisons
 Economic planning
 Inter relation among different sectors
 Helpful in understanding Macro Economic paradox
Limitations of Macro Economics

 Dependence on individual units


 Heterogeneous units
 The composition of structure of aggregates is more
important than the aggregate itself
 Different effects of aggregates
 Limited application
 It ignores the contribution of individual units
Features of Macro Economics

 Macro economics is a short run study


 Is the study of the economy as a whole
 It is a systematized and comprehensive body of
thought
 It aims at reforming and not destroying capitalism
 It is a monetary economics analysis
 State intervention important
 Role of investment is very crucial
 Role of expectations in economics
 General theory
Assumptions of Macro Economics
 Short period
 Perfect competition
 Closed economy
 Diminishing marginal productivity
 Labour is the only variable factor of production
 Labour has money illusion
 Money also acts as store of value
 No time lag
 Under employment equilibrium
 Interest is monetary phenomenon
 Optimum utilization of resources
 Saving and investment functions
Micro and Macro economics compared

Relation Difference

 Degree of aggregates
 Micro depends on
Macro economic  Objectives
analysis  Methods of study
 Paradoxes
 Knowledge of Micro is  Assumptions
essential for Macro  Analytical differeces
economic analysis  Difference relating to
change

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