Unit-1

Q1. Specify micro and macro economics, Distinguish between these people, and clarify the opportunity, importance as well as its limitations Ans. modern economic system analysis has been divided into two major divisions that is tiny and macro economics. Micro economics means the economics system which deals individual economics product on the other hand macro economics means the economics unit which in turn deals mixture as a whole that may be national salary, general job, and total out –put, general selling price level and so forth These two concepts first time employed by PROF. L. FRISCH of Oslo school in 1933. But , later on these two ideas systematically the result of J. Meters. Keynes in his famous book " General theory of employment, interst and money”. Distinguish between tiny and macro economics:

The distinction between micro & macro economics is not too clear lower because precisely what is micro-economics in situation or from one point of view may become macro-economics in another point of view. For example: regarding a shut economy research of cash flow, saving, consumption, employment and so on are macro economics however in case of available economy all of these are micro-economics. If we proceed through its fundamental meaning then simply following would be the important dissimilarities between them: Micro-economics Macro-economics That studies the individual-unit| That studies total economics systems| It explains the price theory| It points out the profits & work theory| It is just a static concept| It is dynamic one

It deals with partial eqm| This deals with standard eqm

It assumes full-employment| That assume below full-employment| It assumes general-price level given| It takes on relative price given| This deals with share of resources| It relates to optimum utilization of total solutions

Scope and importance of macro economics:

Prof. J. K. Mehta seems that as long as men are in society, the economist cannot afford to overlook the study of macro economy. The theoretical and practical importance can be clear from the next points: a) Formulation of economics plans

b) Understanding micro economy

c) Performing of an overall economy system

d) Understating and controlling economic fluctuations

e) Study of economic creation

f) Inflation and decrease

g) Research of nationwide income

h) Performance associated with an economy

i) Nature of fabric welfare

a) Ingredients of economics policies: it assists in the formula of monetary policies. Including monetary and fiscal policies during the inflationary and deflationary situation to solve the issues of within prices, lack of employment, depressions etc . b) Understating micro economic system: the study of macro – economics is essential intended for proper understating of micro-economics. Without macro-economic no micro-economic law happen to be studied. As an example the theory of individual firm could not have been completely formulated without reference to behavior design of general industries. Therefore macro-economic is usually treated while jungle and micro-economic as tree. c) Functioning of the economy: it is utmost essential in getting all of us an idea of the functioning of an economy program. It is very important for a proper and accurate understanding of the behavior design of the mixture variables. With out macro economics we are not been able to learn what type of overall economy system is right now there i. electronic. socialism, capitalism, or mixed economy. d) Understating and controlling economics fluctuation: the idea of economics fluctuations could be understood and built up only with the help of macro economics, for here, we have to take into aggregate usage, aggregate saving and investment in the economy. e) Study of economic development: as a result of advanced study in macro economics, it has become likely to give more attention to the challenge of development of underdeveloped countries. The main aim of macro overall economy is to promote economic welfare. f) Pumpiing and decrease:...

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