THE FIELD OF MACROECONOMICS Flashcards
The term “macro” was first used in economics by — in 1933
Ragner Frisch
Macroeconomics is concerned primarily with the ————- of national income, through the analysis of major economic factors that show predictable patterns and trends, and of their influence on one another.
forecasting
Macroeconomics also covers role of fiscal and———–policies, economic growth, and determination of consumption and investment levels.
monetary
Define macroeconomics?
the field of economics that studies the behavior of the aggregate economy.
Macroeconomics examines economy-wide phenomena such as changes in unemployment, national —i—, rate of –ii— of gross domestic product, inflation and price levels.
i income
ii growth
Alternatively, macroeconomics is the branch of economics that studies the behavior and ——of an economy as a whole.
performance
mention 4 Goal of Macroeconomics
(a) FULL EMPLOYMENT
(b) PRICE STABILITY
(c) ECONOMIC GROWTH
(d) BALANCE OF PAYMENTS
According to Keynes, full employment means the absence of———–unemployment.
involuntary
To achieve full employment, Keynes advocated increase in effective —–i— to bring about reduction in real ——-ii——-
demand
wages
Keynes gave an alternative definition of full employment at another place in his General ‘Theory: “
it is a situation in which aggregate employment is inelastic in response to an increase in the effective demand for its output.”
Thus the Keynesian concept of full employment involves three conditions
(i) Reduction in the real wage rate
(ii) Increase in effective demand
(iii) Inelastic supply of output at the level of full employment.
There are certain difficulties in pursuing a policy of stable price level WHICH ARE:
I. The first problem relates to the type of price level to be stabilized
II innovation may reduce the cost of production but a policy of stable prices may bring larger profits to producers at the cost of consumers and wage earners.
Economic —– is defined as the process whereby the real per capita —– of a country —– over a long period of time.
Growth
Income
increases
Growth is not limitless because ——— are scarce in every economy.
resources
if the money supply is below the existing demand for money at the given exchange rate, there will be a ————- in the balance of payments.
surplus
the attainment of a balance of payment ——— becomes an imperative goal of macroeconomics policy in a country.
equilibrium
Microeconomics is the study of individual———–units of an economy
economic
The main difference between the Microeconomics and Macroeconomics are as follows:
1.
It is the study of individual ——– units of an economy while Macro-economics
is the study of economy as a whole and its ————-
2.
It deals with individual ——- individual——- and individual output, etc.
It deals with aggregates like national income, general price level and national ——-, etc.
3.
Its Central problem is price ————- and allocation of resources.
Its central problem is determination of level of income and ——–
4.
Its main tools are —— and ——– of a particular commodity/factor.
Its main tools are ———- and ——— of economy as a whole.
5.
It helps to solve the central problem of ——-, how and for —— to produce in the economy
It helps to solve the central problem of full ———- of resources in the economy.
6.
It discusses how ——— of a consumer, a producer or an ——- is attained.
It is concerned with the determination of ——- level of ———– and employment of the economy.
7.
—– is the main determinant of microeconomic problems.
——- is the major determinant of macroeconomic problems.
A. economics
b. aggregates
C.income,
D. prices
E. output
F determination
g. employment.
h. demand
i. supply
j. aggregate demand
k. aggregate supply
l. what
m. whom
n. employment
o. equilibrium
p. industry
q. equilibrium
r, income
s. Price.
T. Income
———- is the study of economic actions of individuals and small groups of individuals.
Microeconomics
Who is credited with developing microeconomics as a method of economic analysis?
Marshall
Who is credited with developing macroeconomics as a distinct method in economic theory?
Keynes
Define microeconomics.
The study of economic actions of individuals and small groups of individuals, including households, firms, and particular commodities
Define macroeconomics.
The study of aggregates covering the entire economy such as total employment, total income, total output, total investment, total consumption, total savings, aggregate supply, aggregate demand, and general price level, wage level and cost structure
What did Keynes show to be the causes of deflation and depression?
The deficiency of aggregate demand
