Question

Explain the subject matter of macroeconomics.

Answer 1

The following are some of the important macroeconomic theories which define the subject matter of macroeconomics

• Theory of national income- Macroeconomics helps in the national income analysis. It provides various methods to calculate the national income.
• Theory of employment- Macroeconomics also helps in determining the level of employment and unemployment in an economy.
• Theory of Money- Macroeconomics studies the functions and theories of money. It is useful in analysing the effect of a change in demand and supply of money on the employment levels.
• Theory of general price level- Macroeconomics studies how the general level prices in an economy are determined and the effects of fluctuations on them.