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Macro Economics

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Macro Economics
Unit-1
Q1. Define micro and macro economics, Distinguish between them, and explain the scope, importance and its limitations
Ans. modern economy analysis has been divided into two major branches that is micro and macro economics. Micro economics means the economics system which deals individual economics unit on the other hand macro economics means the economics unit which deals aggregate as a whole that is national income, general employment, and total out –put, general price level etc.
These two concepts first time used by PROF.R.FRISCH of Oslo university in 1933.
But ,later on these two concepts systematically explained by J.M.Keynes in his famous book “General theory of employment,interst and money”.
Distinguish between micro and macro economics:
The distinction between micro & macro economics is not very clear cut because what is micro-economics in situation or from one point of view may become macro-economics in another point of view.
For example: in the case of a closed economy a study of income, saving, consumption , employment etc are macro economics on the other hand in case of open economy all these are micro-economics.
If we go through its basic meaning then following are the important differences between them: Micro-economics Macro-economics It studies the individual-unit | It studies total economics systems | It explains the price theory | It explains the income & employment theory | It is a static concept | It is dynamic one | It deals with partial eqm | It deals with general eqm | It assumes full-employment | It assume less then full-employment | It assumes general-price level given | It assumes relative price given | It deals with allocation of resources | It deals with optimum utilization of total resources |

Scope and importance of macro economics:
Prof. J.K.Mehta feels that so long as men live in society, the economist cannot afford to neglect the study of macro
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