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Explain the concept of Macro economics and its features. (OR) What are the features of Macro Economics?

Balbharati solutions for Economics HSC 12th Standard Maharashtra State Board 

Chapter 1 - Introduction to Micro and Macro Economics [Latest edition]

Explain the concept of Macro economics and its features.

(OR) What are the features of Macro Economics?

Meaning: -

The term Macro is derived from Greek word “Makros” which means large. It is the branch of economics, which studies the behaviour of all economics units combined together. Macroeconomics is a study of aggregates. It is the study of the economic system as a whole. Therefore, it is also called Aggregate Economics.

Definition: -

“Macroeconomics deals not with individual quantities as such, but with aggregates of these quantities; not with individual incomes but with the national incomes; not with individual prices but with the price level; not with individual outputs but with the national output’.

Features of Macro-Economics are as follows:-

1. Study of aggregates:- Macroeconomics deals with the study of nation's economy as a whole. It is a study of very large, economy, wide aggregates such as national output or income, total employment, aggregate demand, aggregate supply, total investment, total consumption, general price level etc.

2. Lumping method:-Macro analysis deals with the behaviour of aggregates i.e. total values of economic variables related to whole economy. It uses a method of lumping to deal with macro variables, such as aggregate demand, aggregate supply, national output etc.

3. A General equilibrium analysis:-

Macro-Economics analysis is based on General Equilibrium Analysis. This analysis deals with entire economy in the context of equilibrium. It studies the behaviour of number of economic variables at a time and takes into consideration their functional relationship and interdependence in doing so.

This approach assumes "Everything depends on everything else."

Since this approach deals with whole economy, it has to explain how aggregate supply and aggregate demand are brought into equality, and how equilibrium between these forces determine, not only price level, but also level of income and employment. This whole analysis involves the study of number of variables and their interactions.

4. Income analysis:- Macro-Economics is also known as the theory of income and employment or simply income analysis. Because, basic subject matter of Macro-Economic analysis is to explain what determines the level of national income and employment and what causes fluctuations in them. Further, it explains the growth of national income over a long period of time.

5. Policy-oriented:- Macro-Economics, according to Keynes is a policy-oriented science. Macro-Economics analysis helps in formulating suitable economic policies to promote economic growth, to generate employment, to control inflation, to pull the economy out of depression etc.

6. Dynamic science:- Macro-Economics studies the changes in aggregate economic variables and analyses dynamic nature of the economy. It enables us to study progress of an economy over a period of time

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