Answer in detail
State the features of Macro economics.
The following are the features of macroeconomics:
i. Study of aggregates: - It is a branch of economics that studies the economic variables of an economy as a whole. It focuses on the aggregate measures such as aggregate demand, aggregate supply, aggregate price level etc.
ii. Lumping method: - Macroeconomics uses the lumping method. That is, it splits up the entire economy into big lumps (sectors) and then studies the aggregate measures such as aggregate demand, aggregate supply, aggregate price level etc.
iii. General equilibrium analysis: - Macroeconomic analysis is based on general equilibrium analysis i.e. it studies equilibrium in different markets simultaneously. This approach assumes “everything depends on everything else”.
iv. Income analysis: - Macroeconomics is also known as income analysis, because its main focus is on how income and employment levels are determined. Also, it studies the causes behind fluctuations in these levels.
v. Policy-oriented: - Macroeconomic analysis helps in formulating policies. These policies help in creating new employment opportunities. Also, they pull the economy out of the low level of income and demand.
vi. Dynamic: - Macroeconomics basically deals with the changes in the economy. It studies how macroeconomic variables such as aggregate demand, aggregate supply, aggregate price level etc. are determined and how they change over time.
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