Importance of macroeconomics


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Importance of macroeconomics

  1. 1. IMPORTANCE OF MACROECONOMICSThe study of macroeconomic variables is indispensable for understanding theworking of the economy. Our main economic problems are related to the behaviourof total income, output, employment and the general price level in the economy.The variables are statistically measurable thereby facilitating the possibilities ofanalyzing the effects on the functioning of the economy. It gives a bird eye view ofthe economic world.For the formulation of useful economic policies for the nation, macro-analysis is ofthe utmost significance; economic polices can not be obviously based on the basisof the fortunes of a single firm or even a single industry or the price of individualcommodity. It is for more fruitful to regulate aggregate employment and nationalincome and to work out a national wage policy. The Keynesian theory of employment is on exercise in macroeconomics.Increasing total investment, total output, total income and total consumption shouldraise unemployment caused by deficiency of effective demand. Thus,macroeconomics has special significance in studying in causes, effects andremedies of general unemployment.The study of macroeconomics is very important for the evaluation of overallperformance of the economy in terms of national income. National income datahelps in forecasting the levels of economics activity and to understand thedistribution of income among different groups of people in the economy.The economics of growth is also a study in macroeconomics. It is on the basis ofmacroeconomics that the resources and capabilities of a framed and implementedso as to raise the level of economic development of the economy as a whole.It is in terms of macroeconomics that monetary problems can be analyzed andunderstood property. Frequent changes in the value of money, inflation ordeflation, affect the economy adversely. Adopting monetary, fiscal and directcontrol measures for the economy as a whole can counteract them.We may conclude that macroeconomics enriches out knowledge of the functioningof an economy by studying the behaviour of national income, output investment,saving and consumption. Moreover, it throws much light in solving the problems ofunemployment, inflation, economic instability and economic growth.
  2. 2. IMPORTANCE OF MACROECONOMICSMacroeconomics is the part of economic science is the study of aggregatevariables of the economy, the aggregate variables is the sum of the individual, ie,consumption of families the added variable is domestic consumption, the expenseof people with variable aggregate domestic spending, saving people with variableaggregate national savings, growth of people with variable aggregate nationaleconomic growth, the production of a person with a variable aggregate domesticproduction, thus Macroeconomics is responsible for studying the behavior ofeconomic variables of a country in order to see how it unfolds the countryeconomically. Among the most important variables are GDP gross domesticproduct, inflation, devaluation, unemployment, public expenditure (spending),EXPORTS, IMPORTS.