Importance of Macro Economics
As a method of economic analysis macroeconomics is of much theoretical and practical importance in several ways:
The study of macroeconomic variables is indispensable for understanding the working of the economy. Our main economic problems are related to the behaviour of total income, output, employment and the general price level in the economy. The variables are statistically measurable thereby facilitating the possibilities of analyzing the effects on the functioning of the economy. It gives a bird eye view of the economic world.
For the formulation of useful economic policies for the nation, macro-analysis is of the utmost significance; economic polices can not be obviously based on the basis of the fortunes of a single firm or even a single industry or the price of individual commodity. It is for more fruitful to regulate aggregate employment and national income 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 should raise unemployment caused by deficiency of effective demand. Thus, macroeconomics has special significance in studying in causes, effects and remedies of general unemployment.
The study of macroeconomics is very important for the evaluation of overall performance of the economy in terms of national income. National income data helps in forecasting the levels of economics activity and to understand the distribution 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 of macroeconomics that the resources and capabilities of a framed and implemented so 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 and understood property. Frequent changes in the value of money, inflation or deflation, affect the economy adversely. Adopting monetary, fiscal and direct control measures for the economy as a whole can counteract them.
We may conclude that macroeconomics enriches out knowledge of the functioning of an economy by studying the behaviour of national income, output investment, saving and consumption. Moreover, it throws much light in solving the problems of unemployment, inflation, economic instability and economic growth.
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