Saturday 25 February 2012

BASIC CHARACTERISTICS OF MACRO ECONOMICS

            The basic features of macro economics are discussed as below:-
1.Short-run period:-Macro economics deals with short run period.We have to solve all problems in a short period.In long run period,we all are dead.
2.Study of aggregate or as a whole economy:-Macro economics is a study of aggregate or as a whole economy which consists national income or national output,aggregate consumption,aggregate investment,effective demand,price levels,full employment or less than full employment.It does not study any individuals.
3.Role of state intervention:-Macro economics has laid stree on the role of sate intervention in all walk of life.In order to cope up private sector,role of state is positive.State plays an active role to solve economic problem.State is like balancing factor.Its intervention is not meant to abolish private enterpreneurs.It rather help it to a great extent.
4.Systematic and comprehensive:-Macro economics is a systematic and comprehensive study in all type of environments .Wheather it is inflation or deflation,boom or depression,full employment or under employment.It makes systematic study of all these conditions.
5.Monetary factors:-Classical economists has laid stress on real forces in their analysis.They consider that main function of money was MEDIUM OF EXCHANGE.But macro economics has given importance to monetary factors which makes considerable effect on the determination of income and employment.This happens due to change in demand and supply of money.
6.Role of investment:-Keynes has given important role to investment.Investment refers addition to the stock of goods and creation of new capital assets.According to prof.Dillard,"Macro economics reduced to its simplest states that employment depends upon the amount of investment."

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