Macro economics | merits demerits |

MACRO ECONOMICS;-

It is defined as

“Macro economics deals not with the individual quantities, but with the aggregates of these quantities, not with the individual incomes but with the national income, not with the individual price but with the general price level, not with the individual output but with the national output.

Main parts of macro economics.

1.    Theory of income & employment:-

In this part of economics we study national income it’s different concept and measurement. Classical and Keynesian theories of employment are also studied under this part.

2.  International trade:-

In this part of analysis the various aspects of balance of payment (bop), balance of trade (BOT),exchange rate system, working of different international organizations like international monetary fund(IMF), world bank (WB) is also studied in this branch.

3.  Public finance:-

In this part of economics, we study about government ravenous and expenditures, government budget, tax system, government debt and its management etc.

4.  Business cycle:-

In this part we discuses about business cycles, these are fluctuations in the aggregates economics activities, these ups and downs on economics activities can be controlled by using appropriate fiscal and monetary policies.

5.  Economic development:-

The study of macroeconomics helps in achieving the desired level of economic development. New theories of economic development explain the cause of poverty and suggest remedies.

MERITS OF MACRO ECONOMICS:-

Following are the merits of economics.

1.  Modern theories:-

Most of the modern theories presented buy different economists about economic planning and development are studies in macro economics.

2.    Decision at national level:-

Some important decisions cannot be made at different level e.g. increases in wages, about taxation system, rate of interest. So decisions can be made at national level.

3.  Solution of economic problems:-

Most of the economic problems of modern era i.e. unemployment, high growth rate of population, deficit balance of payment, inflation and low rate of economic development are studies only ion macroeconomics.

4.  Policies of economic stability:-

For achieving economic stability and development, the policies and strategies can be formed at national level.

DEMERITS OF MACRO ECONOMICS:-

Following are the demerits of macro economics.

1. Profit and loss Existence:-

In the boom period when most of the firms are earning profit, there may be some firm facing loss due to the competition among firms.

2. Ignore the individual production unit:-

If an individual production unit is not working property, it cannot be seen in macro economics, while studying aggregate saving and investment it is not possible to find out where the saving and investment rate is high and where is low.

3. Ignore the welfare of individual:-

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The macroeconomics ignores the welfare of individual, e.g. if national saving is increased at the cost of individuals welfare, then it is not considered as wise policy.

Conclusion:-

          From the above discussion we can easily conclude that the micro economics and the macro economics are the two main branches of economics. they are totally different from each other and their importance varies in the different sectors. in some sectors, micro economics proves to be useful and in other the economics applies, and the macro economics is the combination  of the micro aspects. In micro economics we study the economics system by parts where as in macro we study as a whole