Abhijeet- Macroeconomics Presentation (1)

8/2/2019 Abhijeet- Macroeconomics Presentation (1)

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PRESENTATION ONMACROECONOMICS

GROUP MEMBER NAME

ABHIJIT SRIVASTAVA

RAM NARESH SINGH

PRERNA MATHUR


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Introduction:-

Economics has been defined by different economist in differentways. Its definitions are mainly classified into two categories:-

[1] Problem Type Definition:- Economists like AdamSmith, Marshall, Robbins, etc. have in their definitions,highlighted problems of economics. According to them,

Economics studies those individuals and social problems whichare concerned with the maximum Satisfaction of unlimited wantsby the optimum allocation of limited means.

[2] Method Type Definition:- Economist like J.M.

Keynes have focused on method of economics in theirdefinitions. According to them economics is a method that helpsthe economist to draw correct conclusions. On the basis of thisclassification of the definition of the economics, in the year 1933,eminent economist Prof. Ragnar Frisch of OSLO University

[Norway] had, for the first time, divided the study of economics intwo arts:


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General Definition of Economics:-

Economics is a social Science that studies mansactivities concurring with the maximumsatisfaction of wants or with the promotion ofwelfare & economic growth by the efficient

consumption. Production & exchange of scaremeans having alternative uses.

What is Micro Economics:-

In it economic problems are studied on individuallevel like, problem of consumption of a consumer orthe problem of price determination of a firm, bypartial equilibrium method. Micro economics is also

called Price Theory.


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What is Macro Economics:-

Macroeconomics, on the other hand, is the study ofhow the national economy as a whole grows andthe changes that occur over time. Thus it analyses

the big or the Macro Picture.

In macroeconomics, economic problems arestudied on aggregate level like, total consumptionof economy as a whole, general price level, total

employment, national income etc, by semi generalequilibrium method. Macroeconomics is also calledtheory of Income and Employment.


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What is Macro Economics?:-

Macro economics is the study of economy as a whole.

The term Macro in English has its origin in the Greeklanguage term Makros which means Large. Macroeconomics, therefore, studying economic problems from

the point of view of entire economy, e.g. aggregateconsumption, aggregate employment, national income,general-price levels etc.

In the words of Boulding, Macro Economics Theory isthat part of economics which studies the overallaverages and aggregates of the system.

According to Shapiro, Macro economics deals with


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What is Macro Economics?:- Contd.

In the words of Ackley Gardner, Macro Economicsconcerns with such variables as the aggregate volumeof the output of an economy, with the extent to which

its resources are employed, with the size of nationalincome and with the general price level.

According to M.H. Spencer, Macro Economics isconcerned with the economy as a whole or largesegments of it . In macro economics, attention isfocused on such problems as the level ofunemployment, the rate of inflation, the nations totaloutput and other matters of economy-wide significance.


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Nature of Macroeconomics

Macroeconomics is Science as well asArt

Macroeconomic is bothPositive(Theoretical) and Normative(Solving the problem)in Nature


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Concept of Macroeconomics

There are four concept inmacroeconomics

Stock and Flow Variables Equilibrium and Disequilibrium

Partial Equilibrium and General

Equilibrium Analysis Static, Comparative Static and

Dynamic Analysis


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Stock and Flow Variables

Stock Variables refers to the quantityor value of certain economicvariables given at a point in time.

eg: total money supply on 31stMarch 2006.

Flow Variables are expressed per unitof time.

eg: GDP,Export & Import.


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Equilibrium andDisequilibrium

Equilibrium:

A state or situation in which opposite

forces eg: demand and supply are inbalance and there is no inbuilttendency to deviate from theposition.

Disequilibrium:

State in which the opposite forces

are in imbalance.


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Partial Equilibrium andGeneral Equilibrium Analysis Partial Equilibrium Analysis:

When only one part of the economy

is analyzed in isolation of the rest ofthe economy.

eg: analysis of car price, assuming

all other factors affecting demand forcar(petrol price, sales tax etc.)isconstant

General Equilibrium Analysis:


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Static, Comparative Staticand Dynamic Analysis

Static Analysis:

When an economy is studied under

static conditions. Variables used in this kind of

analysis have no past or future and

all variables belong to the samepoint in time.

Comparative Statics:

Comparative study of economic


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Dynamic Analysis:

When a macroeconomic

phenomenon is analyzed underchanging or dynamic conditions, it iscalled Dynamic Analysis.


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DIFFERENCE BETWEEN MICRO ANDMACRO ECONOMICS

Difference innature

1)It is the study ofthe

Behavior of theIndividuals units.

Difference in

methodology

1)It is the study ofthe behavior of

the economy as awhole.

2)Macro

economics is

MICRO ECONOMICS MACROECONOMICS


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Conti..

FOCUS OF STUDY

4) Micro economics focuses on the study ofprinciples, problem and problem relating to theoptimum allocation of resources.

4)Macro economics focuses on the study ofprinciples, problem and policies related to

employment status and the growth of the resourcesin the economy.

Belongs to

5)Micro economicsbasically belong to thestudy about relationbetween demand andsupply.

5)Macro economics belongsuch a study aboutproduction and environmentetc.


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IMPORTANCE OF MACROECONOMICS

Growing importance of Macroeconomics issue.

Persistence of Macroeconomics problem.

Growing complexity of Economic system.

Need for Government intervention with the marketshare.

Use of Macroeconomics in Business Management.


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LIMITATION OF MACROECONOMICS

Dependence on individual units.

Heterogeneous unit.

Different effect of aggregates.

Limited application.

It ignores the contribution of individual unit.


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MAJOR MACRO ECONOMICISSSUES

Economic growth

Business cycle

Inflation Unemployment

Interest rate


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Abhijeet- Macroeconomics Presentation (1)

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