Page 11 - DECO402_Macro Economics

Macroeconomic Theory

Notes

Notes In macroeconomics, economic problems are studied at the level of whole
economy.

1.2 What do we study in Macroeconomics?

This question is related to scope of macroeconomics. The meaning of scope is dimensions. Means
which economic problems and issues are included in macroeconomics. Its knowledge is essential to
understand its contents. Widely in scope of macroeconomics’ study following are included:
1. Theory of National Income: In macroeconomics studies, different concepts of national income,
its different factors, methods to measure it and social accounting.
2. Theory of Employment: In macroeconomics studies employment and unemployment related
problems. Differents factors that determines level of employment as a effective demand,total
supply, total investment total savings etc. are studied in this.
3. Theory of Money: Changing in demand and supply of money effected employment level to
a great extent. In macroeconomics function of money and that related theories are, studied.
Banking system and other financial institutions are studied also in this context.
4. Theory of General Price Level: The study of changing in general prime level is the main problem
of macroeconomics. Inflation (general increment in price) and deflation (general decreasement
in prices) are the main problems in this context.
5. Theory of Economic Growth: In macroeconomics economic growth means increment in real
per capital income, related problems are studied. Under developed economies growth related
problems are studied specially. Government’s monetary and Financial Policies are studied in
this also.
6. Theory of International Trade: In macroeconomics trade between different countries are
studied also. Theory of international trade, tariff, protection etc. are the most important topic
of macroeconomics.

Self Assessment
Multiple Choice Question:
4. Macro word has taken from Greek’s_____________.
(a) Macros (b) Micros
(c) Origin (d) Name of these
5. In micro and macro economics are added_____________.
(a) of demand (b) of demand/supply
(c) of supply (d) none of these
6. Maicro and macro economics economic factors _____________degree is found.
(a) aggregate (b) cost
(c) curve (d) none of these

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