Understanding Macro Economics: Importance and Significance
Macro economics, a vital field originating with the Mercantilists and further developed by J.M. Keynes, focuses on studying the economy as a whole. It encompasses aggregates like national income, employment, output, and investment, providing insights into economic fluctuations, unemployment, inflation, and growth. Macro economics aids in formulating economic policies, analyzing monetary issues, and evaluating the overall economic performance.
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The term Macro was first used in economics by Regner Frisch in 1933. But as a methodological approach to economic problems, it originated with the Mercantilists in the 16thand 17thcenturies. They were concerned with the economic system as a whole. But credit goes to J.M. Keynes who finally developed a general theory of income, output and employment in the wakeof the Great Depression.
Macro economics is the study of aggregates or averages covering the entire economy, such as total employment, national income, national output, total investment, total consumption, total savings, aggregate supply, aggregate demand and general price level, wage level and cost structure. Macroeconomics also devote itself to such questions as, how business activity; how the price level is influenced by an increase in aggregate volume of employment and in what way the changes in aggregate saving and investment affect the level of national income.
Macro economics is extremely useful from the point of view of various economic policy. The macroeconomics has special significance in studying the causes, effects and remedies of general unemployment. The study of macroeconomics is very important for evaluating the overall performance of the economy in terms of national income. The economics of growth is also a study in macroeconomics through the evaluation of resources and capabilities of an economy. In terms of macroeconomics that monetary problems can be analysed and understood properly. The macroeconomics importance lies in analysing the causes of economic fluctuations and in providing remedies as it was stated after the Great Depression. For understanding the behaviour of individual units the study of macroeconomics is imperative.
Macro economics is enriches our 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.
