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Sunday, 19 February 2012

NATURE AND SCOPE OF MACRO ECONOMICS

        The scope of macnro economics has been explained as under:-
1.Theory of National Income:-Mcro economics studies the concept of national income,its different elements,methods of its measurement and social acoounting.
2.Theory of Employment:-It studies the problems of employment and unemployment.There are different factors which determine employment.They are like effective demand,aggregate demand,aggregate supply,total consumption ,total savings and total investment etc.
3.Marco Theory of distribution:-There are macro economic theories of distrubution.These theories try to explain how the national output is distributed among the factors of production.
4.Economic development:-UDC's  are blessed with mass poverty and low per capita income curve for economic development.Economic development is a long run process.In it,we analyse the problems and theories of development.
5.Theory of International Trade:-It also studies principles determing trade among different countries.Tariff's protection and free-trade polices fall under foreign trade.
6.Theroy of Money:- Changes in demand and supply of money effect level of employment.Therfore ,under macro economics functions of money and theories relating to money are studied.
7.Theory of Business Fluctuations:-It also deals with the fluctuations in the level of employment,total expenditure,genral price level.
8.Theory of Genral Price Level:-A continuous rise in the price level is called inflation.It distorts production.It increases inequalities in the distribution of income and wealth.The common man is injured by inflation.Deflation is the opposite of inflation.The genral price level falls continuously.Output and employment levels fall.Macro economics provides explation provides explation for the occurence of inflation and deflation.

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