Question

In one well formed post to a discussion write a maximum of 350 words and express the following. As an undergraduate student do you feel that the study of Macroeconomics theory is important and if so why?Explain one topic in macroeconomics (any topic)

Answer 1

As an undergraduate student, the study of macroeconomics theory is very important, because it helps us not only to understand the aggregate perspective of the economy and its indicators, but also the government policies that are used to bring stability and growth to the economy. After completion of the course, I will be working in organization where the knowledge of economy as a whole and decisions taken up by the government will help take me right and informed decisions that will be according to the situation in the economy. It is only possible when macroeconomics theory is studied at the undergraduate level.

Further, the one topic of importance is the fiscal policy adopted by the government. The topic explains the initiatives taken up by the government to regulate the growth and stability in the economy. Here, the government opts for the expansionary fiscal policy or contractionary fiscal policy. Government uses a expnasionary fiscal policy, when economy faces recession and real GDP is less than the potential GDP. In this case, government spending or decrease in taxes, helps to stimulate the demand and real GDP of the economy increase. Besides, it also increases employment opportunities.

Government uses contractionary fiscal policy to control the inflation or when the real GDP is more than the potential GDP. In this case, the taxes are increased or spending is decreased, so that ugly spending is curbed.  So, fiscal policy is a very important tool and it is also exhibited by its important role in helping the economy recover from the crisis of 2008. The keynesian perspective also supports the viewpoint that government should intervene with the active or discretionary fiscal policy that can help the economy achieve a balanced growth.