Tamil Nadu Board of Secondary EducationHSC Arts Class 12

Scope of Macro Economics

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Notes

Scope of Macro Economics:

The following chart gives an idea about the scope of macro economics:


i) Theory of Income and Employment :


Macro economic analysis explains which factors determine the level of national
income and employment and what causes fluctuations in the level of income, output and
employment. To understand, how the level of employment is determined, we have to study
the consumption function and investment function. Theory of Business Cycles is also a
part and parcel of the Theory of Income and Employment.


 ii) Theory of General Price Level and Inflation :

Macro economic analysis shows how the general price level is determined and further explains what causes fluctuations in it. The study of general price level is significant on account of the problems created by inflation and deflation.


iii) Theory of Growth and Development :


Macro economics consists of the theory of economic growth and development. It explains the causes of underdevelopment and poverty. It also suggests strategies for accelerating growth and development.


iv) Macro Theory of Distribution :

Macro theory of distribution deals with the relative shares of rent, wages, interest and profit in
the total national income. 

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