Macro Economics Study

Macro Economics Study

Macro-economics, the study of human activities in (large) groups as indicated by economic aggregates such as total employment, national income, investment, consumption, prices, wages , costs. Its use increased after Keynes's General Theory of Employment. The purpose of macro-economic theory is, generally, to study systematically the influences that determine the levels of national income and other aggregates and the level of employment of resources. Macro-economic theorists usually abstract from the problem of determining individual prices and their relations to one another and deal with aggregate price indices as determined by the level of total spending. In micro-economic analysis it is usually assumed that other things remain equal when an individual situation is being analysed; this kind of assumption is not made in macro-economic analysis. Macroeconomics has its own rules because aggregate economic behaviour does not correspond to the total of individual activities. For example, if wages and production costs fall, a single firm may find it profitable to expand output and therefore hire more workers; but it does not follow that a wage cut will lead to a general expansion of employment in the economy as a whole. Similarly thrift may be desirable in an individual but it can in some circumstances harm the community at large.

There is no clear dividing line between macro-economics and micro-economics. Both can yield useful results, singly or together. Although macro-economics has yielded useful generalizations, indiscriminate and uncritical use of them in analysing situations in the real world can be misleading if micro-economic effects on relative prices, on the allocation of resources between or the degree of under-employment of labour or capital in individual industries are overlooked. For example, general full employment (macroeconomics) and the policies that produce it can be irrelevant to the structural .unemploymentin particular firms, industries or areas (micro-economics).

Interested in Economic Institutions - Economic Research Institute


consumeraffairs.org.uk

Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

Economics is in the last resort a technique of thinking. The reader will therefore need to make an intellectual effort, more substantial for some web entries than for others, to get the most interest and value out of this website.