Introduction to the macro economy: the nature and extent

Q1: What is microeconomics? Highlighting the significance and limitations.

ANS: * Introduction: ?

? The economy is the study of the distribution of scarce resources among competing ends, the alternative uses.

? Business is broadly divided into two parts:

^ Microeconomics.

Macroeconomics ^

? Macro-economics is the branch of economic analysis, the behavior of aggregates, that all units combined studies.

* Meaning: ?

-Macroeconomics is the study of aggregates for the entire economy. Thus, macro-economy, tied to the study of aggregates, such as total employment, total output, total consumption, total savings, investment, national income, aggregate demand, aggregate supply, the general level of prices, etc.

? From the macroeconomics deals with aggregates, is also known as the theory of income and employment and income analysis.

* NATURE: ?

? Macro-economics studies of the aggregatesentire economy. The type of macroeconomics can help to understand the following aspects:

i) the determination of national income and employment opportunities:

? Macro-economy is the aggregate demand and aggregate supply determines the equilibrium level of income and employment in the economy is concerned.

? The level of aggregate demand determines the level of income and employment.

? Macroeconomics deals with the problem of unemployment due to lack of aggregateQuestion. In addition, examined the economic fluctuations and economic cycles.

ii) determining the general price level:

? Macroeconomics examines the general price level in an economy.

? Study the problem of inflation and deflation.

iii) economic growth and development:

? It Macroeconomics deals with economic growth and development.

? He studied various factors that contribute to economic growth and development.

vi) the distribution of FACTORSPRODUCTION:

? Macro-economics is also involved in various production factors and their relative share of total production or the total national income

* The scope and meaning:

? Macro-economy takes a central place in economic analysis and has a lot of theoretical and practical importance.

? The importance of macro-economics can be understood from the following points:

i) DECLARATION:

? Macro-economics plays an important role in the formulationEconomic policy. As state intervention in the economy is important in the current economic environment, the knowledge of the aggregates is of great importance in the definition and implementation of economic policy in the country.

ii) base for MICRO STUDY:

? Macroeconomics helps form the basis for the microeconomic analysis of the aggregates as the study, understand and verify the behavior of individual units.

iii) Multi-Dimensional-STUDY:

-Macroeconomics has a very broad and covers the complex issues such as population, employment, income, production, distribution, consumption, inflation, etc.

? This is very useful to control the fluctuations in these factors.

vi) National income:

? Macro-economics studies of national accounts, which helps to understand the distribution of income between different groups of people. There is also a tool for predicting the level of economic activity.

v)SPECIAL MODELS FOR GROWTH:

? Macro-economics, in the development of growth models, special instrumental. This growth pattern has been applied to economic development, because economic growth is, in essence, the study of macroeconomics.

vi) monetary problems:

? Macro-economics has a special significance for the study of monetary issues that impact negatively on the economy.

? In fact, macroeconomics focuses on the problems of inflation and deflation and their solution with the adoption of monetaryControl measures and direct taxes.

* LIMITATION:

? Even if macro-economics for the economic analysis and has a great practical and theoretical, she also suffers from some drawbacks or limitations. These are:

i) unrealistic assumptions:

? Macro-economics assumes that the aggregates are homogeneous. This hypothesis is unrealistic.

ii) general economic well-being:

? Agreement with macroeconomics, the general well-being, and disregards the well-beingindividual level, even if the individual well-being is an important part of economic study.

* CONCLUSION:

? Despite the limitations of the macro-economy is of great practical importance and is widely used.

? Provides practical solutions to economic problems.

? It is complementary to the study of both microeconomics and is essential for proper analysis of economic problems.

Source: http://education-nature.chailit.com/introduction-to-the-macro-economy-the-nature-and-extent.html

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