Macro economics: Concept and Scope

Macro Economics: concept

     Macro economics is derived from the greek word 'micros' which means big. Thus, micro economics is the study of economic activity as a whole. It deals with the economic system as a whole. It explains how economy grows and changes over time as a whole. It is the analysis of aggregative economic variables like national income, total product, employment level, inflation rate, total investment etc. It is also known as income theory.

It was invented by J.M.Keynes

Scope of macro economics

1.Theory of Income and employment

     Consumption Function

     Investment Function

2. Theory of general price level and Inflation

3. Theory of economic growth

4. Macro theory of distribution

5. Theory of Economic fluctuation

6. Theory of international trade

7. Macro economic policy

                                   1.Theory of income and employment
  In macro economics, the income and expenditure is always equal because the expenditure of one person becomes income for another.And finally equals as a whole.Thus, the employment level is fixed at the same point of income.Under this scope of macro economics, we study how country's GDP is fixed.And similarly how to calculate the national income

                                 2.Theory of general price level and inflation
 This theory of macro economics tells about the change in general price level. And the effect of price change in economy and in other macro economic variables. Change in price level is calculated by Price Index.

                                3.theory of economic growth
 Theory of economic growth helps us to study the economic progrss of a nation.Hre, we study about increase in GDP and total production.What determines the economic growth of a nation is also studied here.

                               4.Macro-Theory of distribution
 It simply awares us about the distribution of income in rent, wage, interest, and profit as a whole in an economy.

                            5.Theory of economic fluctuation
 Economic fluctuation refers to business cycle.Here we study the process of change in economy.i.e. GDP., how and why such changes occurs? etc.

                              6.Theory of international trade
Theory of international trade facilitates us for the international trade. Which principle guides the trade between two countries and how the rate of exchange is determined is studied here.

                            7.Macro economic policy
 Here we study about the macro policy like monetary and fiscal policy of a country.