1. Macroeconomics
Prof. Nithin Kumar S
Assistant Professor
Department of Economics
JSS Banashnkari Arts, Cmmerce
Shantikumar Gubbi sience College
Vidyagiri, Dharwad - 580004
2. Introduction
• Ragnar Frisch Introduced the word
Macroeconomics in 1920s
• Macroeconomics is originated from the Greek
word MAKROS
• MAKROS means large
3. MEANING
• Macroeconomics deals with aggregates like, Total
National Income, output, Employment, Total
Consumption etc.
• It is concerned with the analysis of the behavior of
the economic system in totality
4. Definitions
• K E Boulding – “Macroeconomics is that
part of the subject which deals with the great
aggregates and averages of the system rather
than a particular item in it and attempts to
define aggregates in usual manner and to
examine their relationship.”
5. • Prof. Gardner Ackley – “Macroeconomics
concerns itself with such variables and
aggregate volume of the output of the
economy with the extent to which its
resources are employed with the size of the
national income with the general price level”
6. • Mc Connel – “Macroeconomics
examines the forest not the trees. It
gives a bird’s eye view of the
economy”
7. Features of Macroeconomics
1. Study of Macro Variables
2. Use of general equilibrium
3. Importance to Income and Employment
4. Stress on Totality
5. Stress on Reality
6. Time Consideration
7. Income Theory
8. Provides Bird’s Eye View
9. Theory of Income
• Macroeconomics also called the theory of income
• It is inclusive of the theories of income , employment and output
• It is concerned with the problems of unemployment and fluctuations
• It discusses the problems of determinations of the total income of the
country, effects of investment on output, income and employment
• Macroeconomics explains the determinants of employment and income
in an economy
• It also analyses the causes of involuntary unemployment
10. Theory of Inflation and Deflation
• It is also called as the theory of business cycles
• It is concerned with the problems of economic fluctuations,
inflation, deflation and reflection, instability and strategies
• It studies the effects of total quantity of money on the General
Price Level
11. Macroeconomic Theory of Distribution
• It deals with the relative shares of factors in Gross National
Product
12. Theory of Economic Growth
• Growth with stability is the objective of any
economic policy
• Theory of growth studies the factors that retard
growth and those which bring the economy on
the path of development
• Macroeconomics explains the determinants of
Economic Growth
13. Balance of payment and exchange
rate
• The record of economic transactions of a country with the rest
of the world during a financial year is called Balance of
Payments
• The problem of Disequilibrium in Balance of Payments has
become one of the major issues in the macroeconomics
14. Continued…
• Exchange rate influences the Balance of Payments
• The exchange rate indicates the exchange volume of a
currency in respect to foreign currencies
• Instability in exchange rate creates serious problems in
Balance of Payments and the exchange rate has become a
major issue in macroeconomics
15. Uses of Macroeconomics
1. Knowledge of the functioning of an
economy
2. Study of welfare issues
3. Useful to Micro Analysis
4. Necessity of Aggregation
16. Continued…
6. In decision making
7.Knowledge of business cycle
8.Economic planning
9.Accelerating Economic Growth
10.Formulation of Economic Policies
17. Limitations of macroeconomics
1.Danger of generalization
2.Ignores individual differences
3.Misleading conclusions
4.Less useful
5.Problem of measurement
6.Problem of applicability
