Q: Answer in detail.Explain the scope and subject matter of Macroeconomics.

The scope and subject matter of Macroeconomics can be describes as follow: 1. Macroeconomics is concerned with the behaviour of the economy as a whole. It is the study of aggregates and averages of the entire economy. 2. The subject matter of macroeconomics is income and employment, inflation, money supply,price level, investment and economic growth and development. The purpose of macroeconomics is to present a logical framework for the analysis of these phenomena. 3. Having understood these phenomena, the aim is how to ensure the maximum level of income and employment in a country. 4. Since the subject matter of macroeconomics revolves around determination of the level of income and employment, therefore, it is also known as ‘Theory of Income and Employment’. 5. Correct economic policies formulated at macro level make it possible to control business cycles (inflation and deflation) in the economy.

Q: Explain with reasons whether you agree or disagree with following statement.Macroeconomics is a partial equilibrium analysis.

I do not agree with the statement. Macroeconomics is a general equilibrium analysis which studies an economic phenomenon by taking all the aggregate units in the economy into consideration. Partial equilibrium is a condition of equilibrium in the theory of Economics which takes into consideration only a part of the market to attain the equilibrium.

Question 1

Classify the following as final goods or intermediate goods.(i) Machine purchased by a firm. (ii) Soft drinks purchased by the school canteen. (iii) Clothes purchased by an individual. (iv) Coal purchased by a factory. (v) Electricity consumption In a business. (vi) Book purchased by a student. (vii) Books purchased by a book seller. (viii) Postage stamps purchased by a consumer. (ix) Postage stamps purchased by a business unit. (x) Exhaust fans used for making water coolers. (xi) Seeds purchased by a farmer to produce wheat. (xii) Seeds purchased for kitchen gardening. (xiii) Machihes purchased by a dealer of machines. (xiv) Car purchased by a household. (xv) Sewing machine purchased by a housewife.

Accepted Answer

The following are classified as follows:Final Goods: (i), (iii), (vi), (viii), (xii), (xiv), (xv)Intermediate Goods: (ii), (iv), (v), (vii), (ix), (x), (xi), (xiii)

Question 2

Pick the odd one out.

Accepted Answer

Aggregate demand, inflation and national income are a part of macro economic analysis since they deal with the study of national aggregates. However, demand and supply is covered under the subject matter of micro economics, thus, making it the odd one out.

Question 3

Answer in detail.Explain the scope and subject matter of Macroeconomics.

Accepted Answer

The scope and subject matter of&#10;Macroeconomics can be describes as follow:&#10;&#10;1.       Macroeconomics&#10;is concerned with the behaviour of the economy as a whole. It is the study of aggregates and averages of the entire&#10;economy.&#10;&#10;2.       The&#10;subject matter of macroeconomics is income and employment, inflation, money supply,price level, investment and economic growth and development. The purpose of macroeconomics is to&#10;present a logical framework for the analysis of these phenomena.&#10;&#10;3.       Having&#10;understood these phenomena, the aim is how to ensure the maximum level of&#10;income and employment in a country.&#10;&#10;4.       Since&#10;the subject matter of macroeconomics revolves around determination of the level&#10;of income and employment, therefore, it is also known as &#8216;Theory of Income and&#10;Employment&#8217;.&#10;&#10;5.       Correct&#10;economic policies formulated at macro level make it possible to control&#10;business cycles (inflation and deflation) in the economy.&#10;&#10;

Question 4

What are the features of 'macro economics'?

Accepted Answer

Macroeconomics is that branch of economics which deals with the study of national aggregates. The features of macroeconomics are:(1) Study of Aggregates: Macro Economics deals with the study of entire economy. It studies the overall conditions in the economy, such as National Income, National Output, Total Employment, General Price Level etc.(2) Lumping Method: Macro Economics uses the 'lumping' method for the purpose of Economic study. The approach of Macro Economics is aggregative in nature. It considers aggregates like National Income, total consumption, General aggregative price level etc., instead of personal income, per capital consumption, individual prices of commodities etc.(3) A General Equilibrium Analysis: Macro Economics analysis is based on general equilibrium. This is because it deal with the economic system as a whole and studies the inter relationships and interdependence between the various macro variables in an economy. e.g. When aggregate demand and aggregate supply are equal. It will determine the level of income and employment.(4) Income Analysis: Macro Economics is also known as income theory. It studies the factors determining National Income and employment and the causes of fluctuations in income and employment.(5) Policy Oriented: The study of Macro Economics is useful in formulating economic policies to promote economic growth, to control inflation, to generate employment, to pull the economy out of depression etc. Macro Economics is a policy oriented science.(6) Based on Interdependence: Interdependence is the core subject of Marco Economics. Everything depends on everything else. So the is an element of interdependence among the Macro - Economic variables. For examples. changes in the level of investment will finally result in changes in level of income, output, employment and economic growth.(7) Dynamic Science: Macro economics studies the change in aggregate economic variables and analyses the dynamic nature of the economy. It helps us to study the progress of an economy in investment, total production, total employment, growth etc.

Question 5

Macroeconomics does not study ______.

Accepted Answer

The study of macroeconomics involves the study of the factors affecting the economy or society as a whole rather than the individual factors. National income and aggregate supply are kind of factors which affects the whole economy whereas the factor product pricing is a kind of factor which is related to a particular product or particular industry type.

Question 6

______ is the subject matter of macroeconomics.

Accepted Answer

The study of macro-economies involves the study of the factors affecting the economy as a whole rather than the individual factors. Growth theory is a larger factor affects society as a whole, where as other factors given do not come under the purview of study of macroeconomics.

Question 7

Issues related to unemployment are studied at the _________.

Accepted Answer

Unemployment is an economic phenomena that is studied at the national level. Macro economics deals with study of national aggregates. Hence, unemployment is studied at macro level.

Question 8

All of the following, except _______, are subject matter of macro economics.

Accepted Answer

Macro economics is the study of aggregates of the nation as a whole. The scope of macroeconomics is wide as it deals with the economic aggregates of the country, such as national income, aggregate demand and supply, economic growth, inflation, etc. Price equilibrium analysis is limited to the study of equilibrium in a particular market, which is a part of micro economic analysis.

Question 9

Explain with reasons whether you agree or disagree with following statement.Macroeconomics is a partial equilibrium analysis.

Accepted Answer

I do not agree with the&#10;statement.&#10;&#10;Macroeconomics is a general&#10;equilibrium analysis which studies an economic phenomenon by taking all&#10;the aggregate units in the economy into consideration. &#10;&#10;Partial equilibrium is a&#10;condition of equilibrium in the theory of Economics which takes into&#10;consideration only a part of the market to attain the equilibrium.

Question 10

The Great Depression was a period of ______.

Accepted Answer

The Great Depression was an economic slump in North America, Europe, and other industrialised areas of the world that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialised Western world. Factories shut down, exports fell, farmers were badly hit and speculators withdrew their money from the market.