Question

5.Why is the legal issue important for the economy? (Examine the macro issues)

Answer 1

Common macro Economic problems are:-

• Inflation, Unemployment ,Interest rates etc.
• It arises when the Economy does not achieve goals of Employment,stability and Economic growth.
• Unemployment results when Employment is not achieved.

Inflation:-

1. Inflation arises when an Economy falls.
2. The stage of growth arises when Economy is not attaining goal of Economic growth.
3. All these problems are caused either by little or too much demand for gross production.
4. For Eg Unemployment results from little demand and inflation arises with more demand.

Unemployment:-

1. Means Economy is not attaining the goal of full Employment.
2. It is a problem because
3. Less output is produced and
4. Thus problem of scarcity arises in the Economy.
5. Better the Economy, lower is the Unemployment rate.

Inflation:-

1. Average price level in the Economy leads to Inflation.
2. During Inflation there is rise in the price of goods and services.
3. It leads to an average increase in prices.
4. Inflation is a problem because.
5. Due to rise in price of goods and services, purchasing power of money decreases
6. Which in turn decreases financial wealth.
7. Lowers standard of living.
8. Income and wealth are distributed. Among various sectors of the Economy.
9. And the resource owners.

Interest rates:-

1. Are the charges which are received by the banks for lending a loan.
2. As they borrow money from the banks for business.
3. ,Increase in interest rates will influence the business directly.
4. Businesses have to incur higher costs.
5. To repay the loan.
6. Individuals in such conditions have to pay higher amount to borrow money.
7. Declining the demand for large products.