What is Macro-Economics?
Macroeconomics is that branch of economics under which we study the economy as a whole (in totality).
In microeconomics, we study the individual economic units like one household, one firm, or one industry. However, under macroeconomics we study the economic variables (like total savings, total investment, total demand, total supply, total employment, national imcome, general price level) at the level of whole economy.
Significance of Macroeconomics:
1. Functioning of an Economy: Macro economic analysis gives us an idea about the functioning of an economic system. It assists us to understand the behaviour pattern of aggregative variables in a large and complex economic system.
2. Economic Fluctuations: Macro economics helps to analyse the causes of fluctuations in income, output, and employment and makes an attempt to control them or reduce their severity.
3. National Income: Study of macro economics has brought forward the importance of the study of national income. Without studying national income, it is impossible to frame right economic policies.
4. Economic Development: Detailed study in macro economics help to understand the various problems of developing countries like poverty, inequalities of income and wealth, differences in the standards of living of the people etc. It suggests steps that are important to achieve economic development.
5. Performance of an Economy: Macro economics helps in analysis of the performance of an economy. National Income estimates are used to measure the performance of an economy over a period of time by comparing the production of goods and services in one period with that of the other period.
6. Study of Macro economic Variables: Study of macro economic variables is important for understanding the working of the economy. Main economic issues are related to the economic variables such as behaviour of total income, output, employment, and general price level in the economy.
7.Level of Employment: Study of Macroeconomics helps to understand and analyse the general level of employment and output in an economy.