![]() But, the interpretation of the individual activities may not be the same as compared to the conclusion drawn on a mass level. Fallacy of Deductive Inferences: Macroeconomics function on aggregate values.Misleading: The extensive application of the macroeconomics measures seems to be irrelevant when aimed at 100% results.Thus, when such single figures are compiled to get an aggregate value, it may not seem to be that useful. Considers Aggregates as Homogenous: The individual data may not be similar in structure or composition.The following shortcomings of this approach have to lead to its criticism: Why do some economists criticize macroeconomics? Such changes may even influence the economic conditions of the country, ultimately affecting the business organizations. They are sensitive to the fluctuations in the economy of other countries, exchange rates, prices, etc. either export or imports goods from other countries) in international markets. Various economic trends or factors affecting the business are Gross Domestic Product (GDP), employment conditions, investment opportunities, banking, pricing policies, etc. The economic conditions of a country exceedingly influence the operations of any organization. Issues Related to Macroeconomic Trends in the Economy To control this social cost, the government frames specific policies and regulations which act as a hurdle for business organizations. The business operations often lead to social costs such as pollution, soil erosion, depletion of natural resources, endangering wildlife, etc. The analysis of macroeconomics theories and issues helps the economists and the government to figure out the causes and possible solutions of such macro-level problems.ĭealing with different economic conditions by making use of macroeconomics research, opens up the way towards the country’s growth.Īn economist needs to deeply analyze the following problems prevailing in the society as well as the economy while studying macroeconomics: It ensures or keeps a check over the proper functioning of the country’s economy and actual position. Therefore, the ones who look forward to contributing to the welfare of society needs to study macroeconomics. ![]() This stream of economics gives a broader perspective of social or national issues. Macroeconomics also helps the government and the financial bodies to be prepared for the situations of economic instability. It is beneficial for timing the economic fluctuations to avoid or be prepared for any financial crises or adverse situations.įraming of the monetary and fiscal policies majorly depends upon the study of prevailing macroeconomic conditions in the country.ĭownsizes the Effect of Inflation and Deflation Let us now find out its other significance: The answer is macroeconomics is a vital concept that considers the whole nation and works for the welfare of the economy. Why do we need to dig into macroeconomics? These policies are the measures taken to maintain economic stability and growth in the country by regulating the various interest rates. Monetary Policy: Monetary policy is framed by the reserve bank in collaboration with the government. The two segments of this section are as follows:įiscal Policy: As we know, fiscal policy is a means of meeting the deficit of income over the expenditure it is a form of budgetary decision under macroeconomics. The government and the reserve bank functions together while determining the macroeconomic policies, for the nation’s welfare and development. Theory of General Price Level: The most important of all is the analysis of product pricing and how these price levels fluctuate because of inflation or deflation. Also, to know how it affects the supply, demand, savings, consumption, expenditure behaviour. Theory of Employment: This stream of macroeconomics helps to figures out the level of unemployment and prevailing employment conditions in the country. In brief, it determines the impact of cross-border trade and duty charged, on the economy. Theory of International Trade: It is a field of study that enlightens upon the export and import of goods or services. Theory of Money: Macroeconomics analyzes the functions of the reserve bank in the economy, the inflow and outflow of money, along with its impact on the employment level. Theory of National Income: It covers the various topics related to the evaluation of national income, including the income, expenditure and budgeting.
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