Sunday, February 7, 2010

concept of macro economics.

concept of macro economics.
The term 'macro' denoted 'large'.Macro-economics is not the studies of individuals units,but all the units combined together.It deals with the functioning of the economy as a whole.Since it studies aggregate form of the economy,it is also referred to as 'Aggregate' Economics and income theory'.For example,macro-economics studies the big aggregates like national income,national output,general prices level,total employment,saving and investment,Hence,McConnell observes :Here we study forest,not the trees.It gives us a bird's eye view of the economy."

There are numerous definitions of macro-economics some of them have been presented here.

According to Edwin Mansfield,"Macro-economics deals with behaviour of economics aggregates such as gross national product and level of employment".

In the word of R.G.D. Allen "the term 'macro-economics 'applies to the study of relation between broad economic aggregates."K.E.Bounding defines macro-economics in these words "macro-economics is that part of economics which studies the overall averages and aggregates of the system".He opines that macro-economics deal not with individuals quantities,individual incomes,individuals prices,individuals output but with aggregate of these quantities,national income,price level and national output.

According to Gardner Ackley "Macro-economics deals with the economics affairs in large it concerns the overall dimension of economics life.It studies the character of forest,independently of tree which compose it".

It is now obvious that macro-economics is the study of aggregate or the economy as a whole.For example,macro-economics studies how economy's total output of goods and services and the total employment of resources are determined.Macro-economics studies what cause the magnitude of fluctuation.For example,macro-economics explains why at sometimes as little as 2 percent of labour force is unemployed and at other times as much as 10 percent is unemployed.It explains why at sometimes there is full utilisation of economics productive capacity and why at other times a good part of this capacity goes to waste.It seeks to explain why in sometimes period the prices level rises sharply,whereas others it remains stable or even falls. it also explain why the growth of total goods and services grows at average rate of 2 percent per annul an some period at as the rate of 4 percent in another period.To conclude in the words of Edward Shapiro "In brief economics life-full employment or unemployment capacity or under capacity production,a satisfaction or unsatisfactory rate of growth.inflection or prices level stability."Due to outstanding contribution of Keynes macro-economics is often referred to as 'Keynesian Phenomenon.

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