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1.1 Meaning of Macro Economics
Macroeconomics (from the Greek prefix makro- meaning
"large" + economics) is a branch of economics dealing
with the performance, structure, behavior, and decision-
making of an economy as a whole.
This includes regional, national, and global economics.
Macroeconomists study topics such as GDP, Unemployment
rates, National Income, Price Level, output, Consumption,
Inflation, Investment, International Trade and Finance etc..
Prof. Samuelson and Nordhaus “Macro Economics is
the study of the behavior of the economy as a whole. Its
examines the forces that affect many firms, consumers
and workers at the same time.”
1.2 Nature of Macro Economics
1. Economics of Aggregates
2. Use Monetary Expressions
3. No separation between Consumer and Producer
4. Income is a key variable
5. Allocation of resources/ Distribution Theories
6. Income is equal to expenditure
7. General Equilibrium
8. One man’s expenditure is others Income
1.3 Scope of Macro
Economics
Theory of
Income and
Employment
1. Theory of
Consumption
Function
2. Theory of
Investment
Function
Theory of
General
Prices
Theory of
Inflation
Theory of
Deflation
Theory of
Economic
Development
and Planning
Macro
theories of
Distribution
Theories of
Public Finance
Theory of
Trade Cycle
Theories of
Int. Trade
and FOREX
Theory of
Money
and
Banking
1.4 Importance of Macro Economics
1 • Explain functioning of an Economy
2 • Formation of Macro Economic Policy
3 • Help to achieve Economic Growth
4 • Help to stabilize the prices
5 • Avoid dynamic effects on the Economy
6 • Help to understand sector wise performance
7 • Solve the Macro Economic problems
8 • Preparing Macro Economic models
9 • Empirical Analysis
1.5 Limitations of Macro Economics
1 • Aggregate may not true for individuals
2 • Complicated Analysis
3 • Statistical and conceptual difficulties
4 • Aggregates are not homogeneous
5 • Avoid dynamic effects on the Economy
6 • Misleading conclusions
7 • Ignorance of individual approach
8 • Excessive generalization
1. Aggregate may not true for individuals
2. Complicated Analysis
3. Statistical and conceptual difficulties
4. Aggregates are not homogeneous
5. Cant avoid dynamic effects on the Economy
6. Misleading conclusions
7. Ignorance of individual approach
8. Excessive generalization
Economic
Growth
Low
Unemployment
Stable
Exchange
Rate
Satisfactory
Balance of
Payment
Control
Inflation
Protect
Environment
Minimize
Inequality
Less
Public
Dept

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Introduction to Macro Economics.pptx

  • 1.
  • 2. 1.1 Meaning of Macro Economics Macroeconomics (from the Greek prefix makro- meaning "large" + economics) is a branch of economics dealing with the performance, structure, behavior, and decision- making of an economy as a whole. This includes regional, national, and global economics. Macroeconomists study topics such as GDP, Unemployment rates, National Income, Price Level, output, Consumption, Inflation, Investment, International Trade and Finance etc.. Prof. Samuelson and Nordhaus “Macro Economics is the study of the behavior of the economy as a whole. Its examines the forces that affect many firms, consumers and workers at the same time.”
  • 3. 1.2 Nature of Macro Economics 1. Economics of Aggregates 2. Use Monetary Expressions 3. No separation between Consumer and Producer 4. Income is a key variable 5. Allocation of resources/ Distribution Theories 6. Income is equal to expenditure 7. General Equilibrium 8. One man’s expenditure is others Income
  • 4. 1.3 Scope of Macro Economics Theory of Income and Employment 1. Theory of Consumption Function 2. Theory of Investment Function Theory of General Prices Theory of Inflation Theory of Deflation Theory of Economic Development and Planning Macro theories of Distribution Theories of Public Finance Theory of Trade Cycle Theories of Int. Trade and FOREX Theory of Money and Banking
  • 5. 1.4 Importance of Macro Economics 1 • Explain functioning of an Economy 2 • Formation of Macro Economic Policy 3 • Help to achieve Economic Growth 4 • Help to stabilize the prices 5 • Avoid dynamic effects on the Economy 6 • Help to understand sector wise performance 7 • Solve the Macro Economic problems 8 • Preparing Macro Economic models 9 • Empirical Analysis
  • 6. 1.5 Limitations of Macro Economics 1 • Aggregate may not true for individuals 2 • Complicated Analysis 3 • Statistical and conceptual difficulties 4 • Aggregates are not homogeneous 5 • Avoid dynamic effects on the Economy 6 • Misleading conclusions 7 • Ignorance of individual approach 8 • Excessive generalization
  • 7. 1. Aggregate may not true for individuals
  • 9. 3. Statistical and conceptual difficulties
  • 10. 4. Aggregates are not homogeneous
  • 11. 5. Cant avoid dynamic effects on the Economy
  • 13. 7. Ignorance of individual approach