Notes

IMPORTANCE IF MACRO ECONOMICS:
1. STUDY OF AAGGREGATES: Macro Economics deals with the economy as a whole. It studies the behavior of aggregate units such as aggregate income, consumption, investment and the overall level of prices.
2. FUNCTIONING OF AN ECONOMY: The macroeconomic analysis gives us an idea of the functioning of an economic system. It helps us to understand the behaviour pattern of aggregative variables in a large and complex economic system.
3. ECONOMIC FLUCTUATIONS: Macroeconomics helps to analyze the causes of fluctuations in income, output, and employment and makes an attempt to control them or reduce their severity.
4. UNDERSTANDING NATIONAL INCOME: The study of macroeconomics has brought forward the immense importance of the study of national income and social accounts. Without a study of national income, it is not possible to formulate correct economic policies.
5. ECONOMIC DEVELOPMENT: Advanced studies in macroeconomics help to understand the problems of developing countries such as poverty, inequalities of income and wealth, differences in the standards of living of the people, etc. It suggests important steps to achieve economic development.
6. PERFORMANCE OF ECONOMY: Macroeconomics helps us to analyze the performance of an economy. National Income (NI) estimates are used to measure the performance of an economy over time by comparing the production of goods and services in one period with that of the other period.
7. FORMULATING GOVERNMENT POLICIES: Macro economic analysis form the base on which governments formulate their economic and social policies. The developing economics have formulated long term plans and policies to promote growth and development on the basis of the development models.