Question

Write short notes on

1) Features of Macro-Economics

Answer 1

Features of Macroeconomics:
a) Study of aggregates - It is a branch of economics that studies the economic variables of an economy as a whole. It focuses on aggregate measures such as aggregate demand, aggregate supply and aggregate price level.

b) Lumping method - Macroeconomics uses the lumping method. That is, it splits up the entire economy into big lumps (sectors) and then studies aggregate measures such as aggregate demand, aggregate supply and aggregate price level.

c) General equilibrium analysis - Macroeconomic analysis is based on general equilibrium analysis; that is, it studies equilibrium in different markets simultaneously. This approach assumes “everything depends on everything else”.

d) Income analysis - Macroeconomics is also known as income analysis because it studies how income and employment levels are determined. It also studies the causes behind fluctuations in these levels.

e) Policy-oriented - Macroeconomic analysis helps in formulating policies. These policies help in creating new employment opportunities. Also, they pull the economy out of the low level of income and demand.

f) Interdependence among variables- Macroeconomics takes into consideration the interdependence among the various economic variables. In other words, it explains how changes in one variable influence the change in other.