Question

Write more than 750 words an essay about the causes and solutions of macroeconomic and microeconomic failures

please answer it by typing

please no plagiarism

Answer 1

Macroeconomics is the division of economics which deals with the study of the essential economic constituents like Gross Domestic Product (GDP), Gross Natioanl Product (GNP), National Income, Employment, Investment, Inflation,Interest rate, Marke conditons, etc. Those constituents are analyzed as a whole component, All policy makers and members of the Federal Bank of the Government usually frame the new economic policy by using the research work related to above metioned constituents of economic factors. To be more detail, Macroeconomics is the one of the empircal studies discuss the factors which influences the Long-run effect as well as the Shoft-run effect in the Economy as a whole. Virutally it is not only the study of knowing the theoretical facts, but the study of experimenting the situations occuring in the real-life environment. It can also evidently scrutinize the fact of every units of Demand and the Supply of all economic factors which helps the Government to secure the source of funds which helps to cater the needs of monetary means throughout the year.

The second vital part of the economics is the Microeconomics. It is the concept of studying and analyzing as the part of the study. To say more in detail, It is the study of the expected outcome how far it can be achieved with limited number of allocative resources. The microeconomic theories are mostly used in Adminstrative machinery in the companies. The committee members of the administration department will use the tools of the microeconomics in order to eliminate the redundant factors which hinders the growth of output as well as increases the cost of production. The tools also used by economists to find the optimum usage of scarce resources.

The causes and the failures of macroeconomics are discussed in aggregative units. While in microeconomics those causes and failures are discussed in partial unit among all other total units. Lets us discuss those things briefly. In the economic cycle of the country, Invesment, employment, inflation, production are interlinked. If the borrower lends the money in the bank which charges the high rate of interest then borrowers will caught in the financial crisis leads to more savings in the economy. It will leads to less consuming activities. When the purchasing power of the money reduces, the quantity of goods and services will drastically reduce in the production units. The Labour forces will get less employement opportunities. Therefore income of the people will reduce in the considerable effect due to existing unemployment problems. At the same time when money supply increases, the prices of the goods increases. This will lead to Inflation. Too much inflation is also not good for the balanced economy. Then the state of recession will capture the position in the economy.

There will be more causes and failures threat the individuals and the firms as the part of the economy. The Elasticity of the Demand has inverse relation with the price of the goods. The failure in the price mechanism leads to less elasticity of the demand. If the firms fails to meet the optimum level of Marginal Revenue and its Marginal Cost, the disequilibrium level of production level will ihcrease the cost of production to very high level. This complexity occurs only due to scare resources are used for the production of goods and services. Then the Balance of paymets with high exchange reserve will reduce if the price of the particular export product are not stabled in the proper way. Then the money value of the particular currency will reduce and there will be deficit exchange reserves will happen in the economy.