WHAT IS MACRO ECONOMICS

WHAT IS MACRO ECONOMICS

Macro economics also called "income Theory" Macro means very large, John Maynard Kedynes gave clear meaning to this concept in 1936 with the publication of his book. "General Theory of Employment, Interest and Money" as:

'Macro Economics is the study of aggregates and average of the whole economy'
'Macro Economic theory is the theory of income,
'Macro Economics deals with the functioning of Economy as a whole'

In Macro economics, following theories are studied.

1. THEORY OF EMPLOYMENT AND INCOME DETERMINATION

In this theory we study all the problems that arise in connection with the income and employment at national level. Here we also study how to raise the level of national income and employment in the country.

2. THEORY OF TRADE CYCLE

In this theory we study the causes of the ups and downs in business, prices and national income under capitalistic system of production. We also study the ways by the use of which these fluctuation can he removed.

3. THEORY OF MONEY

In this theory we try to understand the problems of money and banking. We attempt here to find out their solutions at the national level. I lere we study also the problems connected with the general price level.

4. THEORY OF INTERNATIONAL TRADE

Generally the problem of international trade is included in Macro economics but both the Micro & Macro approaches are used to study the problem.

5. THEORY OF PUBLIC FINANCE

In this theory the problems relating to the source of government revenue, the items of expenditure of the govt. and public debts are studied.

 ADVANTAGES

Following are the advantages of the study of Macro economics:
It is helpful in understanding the functioning of a complicated economic system. Study of individual aspect of the economy leads us nowhere. In fact the economy is more important than the individual. I

It is helpful in the formation of useful economic policies for the whole nation.

LIMITATIONS

Limitations of the theory are as follows:

It ignores individuals. it is individual's welfare that is the main aim of economics.  Increasing national savings at the expense of individuals' welfare is not a wise policy.

Macro economics overlooks individual differences. While speaking of the aggregates. It is also essential to remember the nature, composition and structure of the components.

NEED FOR INTEGRATING MICRO AND MACRO ECONOMICS

It is impossible to understand any kind of economic phenomenon properly without full understanding of both Micro & Macro Economics. What is true of the part may not be true of the whole and vice versa. Sometimes the economy of the country tends to flourish as a whole whereas the individual industry may be languishing and vice versa. So it is very important to integrate the two approaches in order to. et the correct solutions of economic problems.

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