PRESENTATION ON MACROECONOMICS

GROUP MEMBER NAME

ABHIJIT SRIVASTAVA RAM NARESH SINGH PRERNA MATHUR 4/1/12

Introduction:Economics has been defined by different economist in different ways. Its definitions are mainly classified into two categories:-

[1] Problem Type Definition:-

Economists like Adam Smith, Marshall, Robbins, etc. have in their definitions, highlighted problems of economics. According to them, Economics studies those individuals and social problems which are concerned with the maximum Satisfaction of unlimited wants by the optimum allocation of limited means.
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[2] Method Type Definition:-

Economist like J.M. Keynes have focused on method of economics in their definitions. According to them economics is a method that helps the economist to draw correct conclusions. On the basis of this classification of the definition of the economics, in the year 1933, eminent economist Prof. Ragnar Frisch of OSLO University [Norway] had, for the first time, divided the study of economics in 4/1/12 two parts:

General Definition of Economics:Economics is a social Science that studies mans

activities concurring with the maximum satisfaction of wants or with the promotion of welfare & economic growth by the efficient consumption. Production & exchange of scare means having alternative uses.

What is Micro Economics:In it economic problems are studied on individual level like, problem of consumption of a consumer or the problem of price determination of a firm, by partial equilibrium method. Micro economics is also called 4/1/12 Price Theory.

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What is Macro Economics:Macroeconomics, on the other hand, is the study of how the national economy as a whole grows and the changes that occur over time. Thus it analyses the big or the Macro Picture. In macroeconomics, economic problems are Click aggregate level style studied on to edit Master subtitle like, total consumption of economy as a whole, general price level, total employment, national income etc, by semi general equilibrium method. Macroeconomics is also called theory of Income and Employment.
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What is Macro Economics?:Macro economics is the study of economy as a whole. The term Macro in English has its origin in the Greek language term Makros which means Large. Macro economics, therefore, studying economic problems from the point of view of entire economy, e.g. aggregate consumption, aggregate employment, national income, general-price levels etc.

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In the words of Boulding, Macro Economics Theory is that part of economics which studies the overall averages and aggregates of the system.

4/1/12 According to Shapiro, Macro economics deals with

What is Macro Economics?:- Contd.

In the words of Ackley Gardner, Macro Economics concerns with such variables as the aggregate volume of the output of an economy, with the extent to which its resources are employed, with the size of national income and with the general price level.

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According to M.H. Spencer, Macro Economics is concerned with the economy as a whole or large segments of it . In macro economics, attention is focused on such problems as the level of unemployment, the rate of inflation, the nations total 4/1/12 output and other matters of economy-wide significance.

Nature of Macroeconomics

Macroeconomics is Science as well as Art Macroeconomic is both Positive(Theoretical) and Normative (Solving the problem)in Nature

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Concept of Macroeconomics
There are four concept in macroeconomics

Stock and Flow Variables Equilibrium and Disequilibrium Partial Equilibrium and General Equilibrium Analysis Static, Comparative Static and Dynamic Analysis
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Stock and Flow Variables

Stock Variables refers to the quantity or value of certain economic variables given at a point in time.

eg: total money supply on 31st March 2006.

Flow Variables are expressed per unit of time. eg: GDP,Export & Import.
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Equilibrium and Disequilibrium

Equilibrium:
A state or situation in which opposite forces eg: demand and supply are in balance and there is no inbuilt tendency to deviate from the position.

Disequilibrium:

State in which the opposite forces are in imbalance. 4/1/12

Partial Equilibrium and General Equilibrium Analysis

Partial Equilibrium Analysis:

When only one part of the economy is analyzed in isolation of the rest of the economy.

eg: analysis of car price, assuming all other factors affecting demand for car(petrol price, sales tax etc.)is constant

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General Equilibrium Analysis:

Static, Comparative Static and Dynamic Analysis

Static Analysis:
When an economy is studied under static conditions. Variables used in this kind of analysis have no past or future and all variables belong to the same point in time.

Comparative Statics:
Comparative study of economic

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Dynamic Analysis:
When a macroeconomic phenomenon is analyzed under changing or dynamic conditions, it is called Dynamic Analysis.

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DIFFERENCE BETWEEN MICRO AND MACRO ECONOMICS MICRO ECONOMICS MACRO ECONOMICS

Difference in nature 1)It is the study of the Behavior of the Individuals units. Difference in methodology 4/1/12

1)It is the study of the behavior of the economy as a whole.

2)Macro economics is

Conti..
FOCUS OF STUDY 4) Micro economics focuses on the study of 4)Macro economics focuses on the study of principles, problem and problemrelated to the principles, problem and policies relating to optimum allocation of resources. employment status and the growth of the resources in the economy. Belongs to 5)Micro economics basically belong to the study about relation between demand and supply.
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5)Macro economics belong such a study about production and environment etc.

IMPORTANCE OF MACROECONOMICS

Growing importance of Macroeconomics issue. Persistence of Macroeconomics problem. Growing complexity of Economic system. Need for Government intervention with the market share. of Macroeconomics in Business Management.

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LIMITATION OF MACROECONOMICS

Dependence on individual units. Heterogeneous unit. Different effect of aggregates. Limited application. It ignores the contribution of individual unit.
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MAJOR MACRO ECONOMIC ISSSUES

Economic growth Business cycle Inflation Unemployment Interest rate

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