Answer in Brief
Explain the importance of Macro economics.
The importance of Macro economics is explained follows:
- Functioning of an Economy: Macro economic analysis gives us an idea of the functioning of an economic system. It helps us to understand the behaviour pattern of aggregative variables in a large and complex economic system.
- 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.
- National Income: Study of macro economics has brought forward the immense importance of the study of national income and social accounts. Without a study of national income, it is not possible to formulate correct economic policies.
- Economic Development: Advanced studies in macro economics help to understand the problems of developing countries such as poverty, inequalities of income and wealth, differences in the standards of living of the people, etc. It suggests important steps to achieve economic development.
- Performance of an Economy: Macro economics helps us to analyse the performance of an economy. National Income (NI) estimates are used to measure the performance of an economy over time by comparing the production of goods and services in one period with that of the other period.
- Study of Macro economic Variables: To understand the working of the economy, a study of macro economic variables is important. Main economic problems are related to the economic variables such as behaviour of total income, output, employment, and general price level in the economy.
- Level of Employment: Macro economics helps to analyse the general level of employment and output in an economy.
Concept: Macro Economics
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