Q.1. Give two examples of macroeconomic study.
Ans. Following are the two examples of macroeconomic study:
(a) Study of the national income
(b) Study of employment level
Q.2. What is the name of Keynesian book published in 1936?
Ans. The name of the Keynesian book published in 1936 is ‘The General Theory of Employment, Interest and Money'.
Q.3. Give one example of microeconomic variable.
Ans. Demand for a particular good is a microeconomic variable.
Q.4. Give examples of macroeconomic variables.
Ans. A few examples of macroeconomic variables include total output, rate of inflation, level of unemployment and recession in the world economy.
Q.5. What do you understand by macroeconomics?
Ans. Macroeconomics is the branch of economics that studies the behaviour of factors affecting the economy as a whole. It focuses on the behaviour of national level aggregates such as national income, total output, employment level, price level, etc. Macroeconomics is also called aggregative economics.
Q.6. Is the study of cotton textile industry a macroeconomic or a micro economic study?
Ans. The study of cotton textile industry is a microeconomic study.
Q.7. What is microeconomics?
Ans. Microeconomics is the branch of economics that studies the behaviour of individual decision making units such as households and firms. Equilibrium prices and quantities of goods and services are determined through the interaction of individuals in the market.
Q.8. List the events of macroeconomic study.
Ans. The events of macroeconomic study include:
(a) Rate Of Inflation
(b) Level of unemployment
(c) Decline in agricultural and industrial output
(d) Fluctuations in business activities
(e) Accumulation of foreign exchange reserves
(f) Capital market changes
Q.9. What do you understand by macroeconomics?
Ans. The word ‘Macro' is derived from the Greek word ‘Makros', which means ‘large'. Macroeconomics is the branch of economics that studies the behaviour of factors affecting the economy as a whole.
It focuses on the behaviour of national level aggregates such as national income, total output, employment level, price level, etc. Macroeconomics is also called aggregative economics. While in microeconomics small groups of economic units are related to a particular good and a particular industry, in macroeconomics, these groups are related to all the goods and all the industries.
Q.10. Give five variables of macroeconomics.
Ans. Following are the five variables of macroeconomics:
(a) Theory of Income and Employment
(b) Theory of Money
(c) Trade Cycle
(d) Macro Theory of Distribution
(e) Growth Economics
Q.11. What is the scope of macroeconomics?
Ans. The scope of macroeconomics can be described as below:
(a) Theory of Income and Employment: Macroeconomics studies national income, its different assumptions, methods of measurements, social accounting, etc. It also includes study related to determination of equilibrium level of income and employment. National income and the level of employment depend upon effective demand. For the analysis of effective demand, total demand, total supply, total consumption, total investment, total saving, multiplier etc. are studied.
(b) Theory of Money: In macroeconomics, the principles of capital are studied. Macroeconomics also studies the functions of money, changes in demand for and supply of money, and theories relating to money, banks and financial institutions.
(c) Theory of Trade Cycles: Macroeconomics studies the fluctuations in the country’s economic activities such as aggregate production, employment, interest rates, trade, general price level, etc.
(d) Macro Theory of Distribution: It deals with the study of relative shares of labourers and capitalists, in the form of wages and profits respectively, in the total national income.
(e) Theory of Growth: Macroeconomics studies the rate and level of economic development. Economic growth includes growth or changes due to increase in per capital real income. Public finance and financial policies of the government can also be studied by using macroeconomics.
Q.12. Which are different factors of production that are involved in circular flow model?
Ans. Land, Labour,Capital and enterpreneur are four major factors of production that are involved in circular flow model.