Question

In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported by course concepts. Your initial post is due by Wednesday to allow other students to respond.

How will an understanding of macroeconomics affect your daily life?

Answer 1

Macroeconomics is the study of aggregates aur averages covering the entire economy such as national income, full employment, aggregate demand, general price level etc. It is primarily concerned with the study of relationship between economic aggregates. It studies economic problems at the level of an economy as a whole.

It provides an understanding of circular flow of income and help us to understand if there were leakages and injections to the circular flow of income. Formulation of government budget, policies regarding control of inflation and deflation becomes easier with the help of various macroeconomic aggregates like government revenue, expenditure, etc.

it facilitates international comparisons by providing information about aggregate demand and supply, surplus and deficit balance of payment etc. it helps to co-ordinate various policies and measures at macro level to solve economic problems like poverty, unemployment, inflationary and deflationary gap etc. under macroeconomics we try to understand how the level of income and employment is determined and how unemployment can be removed. Micro variables depend on behaviour of macro variables that is decisions at micro level depends on decisions taken at micro level for example the price of a commodity is influenced by general price level in the economy. similarly macro variables depends on micro variable that is decisions at micro level depends on decisions at micro level. for example aggregate demand depends on the demand of individual households of the economy. National income of a country is sum total of income of individual unit of the economy.