General theory of employment, interest and moneyġ- Microeconomics uses the method of partial equilibrium. It can be said that macroeconomics uses the principles of microeconomics as its foundation and the former is a magnified version of the latter. ![]() ![]() To know well about the working of an economy, one must have the knowledge of both the branches of economics. Micro and macro approaches are complementary. Thus, studying the problems related to growth and improving the per capita income and national income are major concerns of macroeconomics.ĥ) Micro and Macro approaches are complementary. It also analyses how efficient utilisation of resources can be done. Macroeconomics analyses the reason for underdevelopment and poverty in a country. It is studied under microeconomics.Ĥ) Growth theory is the subject matter of Macroeconomics.Īccelerating growth and development constitute the subject matter of macroeconomics. As product pricing is an individual variable, it is not studied under macroeconomics. It focuses on aggregate measures such as aggregate demand, aggregate supply and aggregate price level. Macroeconomics studies an economy as a whole. Thus, problems concerning the price level constitute the subject matter of macroeconomics.ģ) Macroeconomics does not study product pricing. Macroeconomics studies how the prices of goods and services in an economy are determined and what causes the change in the price level. ![]() It was then when Lord John Maynard Keynes, for the first time, used the macro approach in his book “General Theory of Employment, Interest and Money”.Ģ) Macroeconomics studies the problem of inflation in an economy. The need for a separate branch of economics, i.e., macroeconomics was felt inevitable during the period of The Great Depression (1929). 1) The credit of development of macroeconomic approach must go to Lord Keynes.
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