Scope and Importance of Macro Economics

Macro economics is of theoretical and practical importance. They are: 

1. To understand the working of the economy: 

The study of macro economics variables is indispensable for understanding of the working of the economy. Our main economic problems are related to the behaviour of total income, output, employment and the general price level in the economy. These variables are statistically measurable, thereby facilitating the possibilities of analyzing the effects on the functioning of the economy. As Timbergen observes, macro economic concepts help in,” making the elimination process understandable and transparent”. For instance, one may not agree on the best method of measuring different prices, but the general price level is helpful in understanding the nature of the economy. 

Types of Macro Economics

Types of Macro Economics are:

1. Macro static
2. Macro dynamics
3. Comparative static

Macro static’s: 

The word ’static’s is derived from the Greek word ‘statike’ which means bringing to s standstill. In physics, it means a state of rest where there is, no movement. In economics, it implies a state characterized by movement at a particular level without any change. It is a state, according to Clarke, where five kinds of changes are conspicuous by their absence. The size of population, the supply of capital, methods of production, forms of business organization and wants of the people remain constant, but the economy continues to work at a steady pace. “It is to this active but unchanging process,” writes Marshall,” that the expression static economics should be applied”. 

Meaning, Definition and Nature of Macro Economics

Introduction

The term ‘macro’ was first used in economics by Ragner Frisch in 1933. But as a methodological approach to economic problems, it originated with the mercantilists in the 16th and 17th centuries. They were concerned with the economic system as a whole. From the 18th century physiocrats to modern economists have contributed to the development of macro economic analysis. But credit goes to Keynes who finally developed a general theory of income, output and employment in the wake of the great depression.

Definition of Macro Economics

Macro economic is concerned with aggregates and averages of the entire economy. Such as national income, output, total employment, total consumption etc. In other words, macro economics studies how the aggregates and averages of the economy as a whole are determined and what causes fluctuations in them.