Macroeconomics scope is wide and it studies the economic variable affecting the economy as a whole and other economies as well.
Macroeconomic is called income and Employment analysis.
It studies the effective demand and income, employment, investment economic variables.
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Scope of Macroeconomics
The scope of macroeconomics is very wide following points can be studied under it:
1. Theory of Income and Employment
In it, the formulation of income and Employment level is done and the study of consumption, function, investment, function, multiple and accelerator is also done.
2. Theory of General Price Level
In it, the formulation of the general price level is studied and problems related to inflation, deflation are a prime subject matter of Macroeconomics.
Related: 7 Scope and Types of Microeconomics Analysis (With Examples).
3. Theory of Development and Planning
For a fast and balanced development, developing countries apply many economic theories.
So, the study of process and theories of economic development and planning is also an important subject matter of Macroeconomics.
4. Theory of trade cycle
In the macroeconomics study of the trade, the cycle is done.
The factor of Boom and Depression in the trade cycle, there effects and removal of these effects are studied in Macroeconomics.
5. Theory of International Trade and Foreign Exchange
It is also a subject matter of Macroeconomics.
Under its theory of International Trade, terms of trade, determination of foreign exchange rates, etc. Are studied.
6. Theory of Public Finance
In it, the study of theories, policies, and effects related to government income, expenditure loans, etc. are done.
The study of fiscal policy is the prime subject matter of public finance.
Related: 15 Importance and Limitations of Microeconomics (Explained).
7. Principles of Money and Banking
In macroeconomics, theories related to Money and banking, country’s monetary and credit system, functions of the central bank and other banks and international finance are studied.
8. Macro-Theory of Distribution
In macroeconomics study of the distribution of wages and profits in national income is done.
So, it is clear that the scope of Macroeconomics it’s very wide.
Importance of Macroeconomics
Following are the importance of macroeconomics:
1. Useful in Formulation of Economic Policies
Macroeconomics is very useful in the formulation of economic policies.
Macroeconomics is very important in the view of economic policies because economic policies of the government are related to the group of individuals and not with individuals.
Related: 12 Factors Affecting Entrepreneurship Development.
2. Understanding the Collective and Complex Operation of Economy
In Microeconomics knowledge of only individual units can be done but for the collective and complex operation of while the economy, Macroeconomics is helpful.
3. Helpful in Development of Microeconomics
It is helpful in the development of microeconomics because the formulation of laws and theories of microeconomics is done with the help of macroeconomics.
4. Solving various Economic Problems
Economists take the help of macroeconomics in solving the problem related to the whole economy, like-National income, National Savings, and investment, consumption, production, etc.
5. Useful in Economic Planning
At present, for the solution of economic problems and for fast and balanced economic development.
Every nation takes the help of economic planning and the determination of targets in plans is done on the basis of Macro Analysis.
Related: 5 Main Types of Disequilibrium in Balance of Payments (BOP).
6. Analysis of trade cycle
On the basis of macroeconomics by doing the analysis of factors boom and depression, important steps are taken for the removal of the cycles.
7. Analysis of Monetary Problems
Knowledge of the determination of monetary policy of a country, the study of its effect and cause of monetary problems and solutions for the removal of these problems is done only by Macro analysis.
8. Study Whole Economy
Due to micro paradoxes, it is essential to study the whole economy because those decisions which are applicable to individual units it is not necessary that the same decision will be applicable to the whole economy.
9. Analysis of Unemployment
In a country, the reason for unemployment is due to a lack of effective demand.
So for the removal of unemployment increase in effective demand is essential.
These factors of unemployment, its effect, and solutions for removal of these effects is possible through Macro Analysis.
Thus, now you know and understand the scope and importance of macroeconomics.
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