Question

Discuss the scope of Macro Economics.

Answer 1

The study of macro economics has a wide scope and it covers the major areas as follows:

1. National Income:
   Measurement of national income and its composition by sectors are the basic aspects of macroeconomic analysis. The trends in National Income and its composition provide a long-term understanding of the growth process of an economy.
2. Inflation:
   It refers to a steady increase in the general price level. Estimating the general price level by constructing various price index numbers such as Wholesale Price Index, Consumer Price Index, etc, are needed.
3. Business Cycle:
   Almost all economies face the problem of business fluctuations and business cycles. The cyclical movements (boom, recession, depression, and recovery) in the economy need to be carefully studied based on aggregate economic variables.
4. Poverty and Unemployment:
   The major problems of most resource-rich nations are poverty and unemployment. This is one of the economic paradoxes. A clear understanding of the magnitude of poverty and unemployment facilitates the allocation of resources and initiating corrective measures.
5.  Economic Growth:
   The growth and development of an economy and the factors determining them could be understood only through macro analysis.
6. Economic Policies:
   Macro Economics is significant for evolving suitable economic policies. Economic policies are necessary to solve the basic problems, to overcome the obstacles, and to achieve growth.