1. What
are macro economies? 2015
Ans. Macro
economics is the study of aggregates of the entire economy like national
income, full employment, total investment etc.
2. Who are
the macroeconomic decision makers?
Ans:
Households, firms and governments are macro economics decision makers.
3. What is
general equilibrium?
Ans.
General equilibrium relates to numerous variables or even the economy as a
whole. It traces the overall effects of a disturbance in all sectors of the
economy.
4.
Distinguish between partial equilibrium and general equilibrium.
Ans.
Partial equilibrium refers to the equilibrium in one particular market say
product market. It is here assumed that there is no changes in other markets
say labour market or capital market. General equilibrium, on the other hand,
refers to the equilibrium in all markets of the economy simultaneously. Partial
equilibrium is studied in microeconomics whereas general equilibrium is studied
in macroeconomics.
5. Name
the school of thought who believes that all the labourers who are ready to work
get employment and all the factories works at their full capacity.
Ans:
Before Keynes, classical school thought believes that all labourers who are
ready to work and get employment.
6. Who is
the author of the book, “The general theory of Employment, Interest and Money?
Ans: John
Maynard Keynes (J.M. Keynes)
7. In
which year the book ‘The general theory of Employment, Interest and Money was
published?
Ans: In
the year of 1936
8. Which
of the following is not included in the subject matter of macro economics:
a) Balance of
Payment.
b) National
Income.
c) Demand for
Money.
d) Consumer’s
surplus.
Ans:
Consumer’s Surplus
9. Write
true or false: Macro economics deals with the aggregate economic variables of
an economy.
Ans. True
10. What
are economic agents in an economy? Name them.
Ans: By
economic agents (or units) we mean those individuals or institutions which take
economic decisions. Firms, households and government are the major economic
agents in an economy.
11. What
is Capitalist Economy? Mention the characteristics of a capitalist economy.
Ans: Capitalism is an economic system
where private entities own the factors of production. The main
characteristics of a capitalist economy are as follows:
a) Under
capitalism, the private ownership of property for all the people.
b) Under
capitalism, the main aim of producer is to attain maximum profit.
c) Market
forces determine the price of a commodity. That means all economic decisions
are taken by market mechanism.
d) The
individuals and firms are free to choose occupation and use the available
natural resources of the country.
12.
Mention any three economic functions of a state.
Ans: The
main economic functions of a state are as follows:
1) Extension
of Education.
2) Extension
and development of health services.
3) Development
of infrastructural facilities.
13. Why is
macroeconomics known as ‘Theory of Income and Employment’?
Ans: The
subject matter of macroeconomics revolves around the determination of national
income and employment. Therefore, it is known as theory and income and employment.
14. What
is meant by macroeconomic paradox?
Ans: What
is desirable for an individual economic unit may not be desirable for the
society as a whole. This is called macroeconomic paradox.
15. Why do
we need a separate study of macro economics?
Ans: A separate
study of macroeconomic is required because of the following reasons:
a) What is
true (good) to an individual may not be desirable for the society as a whole.
For instance, saving is a virtue for an individual, as it brings future
prosperity to him.
b) There are
certain ‘big issues’ like problems of growth and development, inflation,
unemployment etc. which need to be handled only at the level of economy.
16.
Describe the great depression of 1929.
Ans: During
1929-33 the output and employment fell by huge amount in the countries of
Europe and North America. It affected the other countries of the world as well.
The aggregate demand was low, many factories were lying idle, and workers were
thrown out of jobs. Income levels were falling, there was widespread
unemployment. In USA from 1929 to 1933, unemployment rate rose from 3% to 25%
and output fell by about 33%.
17. What
are macro economies? Explain its scope and objectives.
Ans: Macro
economics is the study of aggregates of the entire economy like national
income, full employment, total investment etc. 2015
Scope of Macro Economics or Areas with
which macro economics deals with
Macro
economics is concerned with the aggregates and averages of the entire economy,
such as national income, national output, total employment, total consumption,
general per capital income, price level etc. In it, we study how these
aggregates and averages are determined and what causes fluctuations in them.
Macro economics mainly deals with:
a)
Theory of income and employment
b)
General Price level
c)
Theory of economic growth
d)
Macro theory of distribution
Objectives of Macroeconomics
a) To determine income level of the
economy.
b) To determine employment level of
the economy.
18.
Distinguish between micro economics and macro economics.
Ans:
Following are the difference between micro and macro economics.
a) Micro
economics studies the behaviour of industries of the economy such as consumers,
producers and explain how the prices of goods and services and factors are
determined. On the other hand, Macro economics studies the economy as a whole
and explains how aggregates of the entire economy such as national income,
general price level, level of employment etc. are determined.
b) The word
micro has been derived from the Greek word mikros which means small. On the
other hand, macro economics is also derived from the Greek word makros which
means large.
c) Micro
economics is based on partial equilibrium analysis which helps to explain the
equilibrium conditions of a individual, a firm, a industry and a factor. On the
other hand, macro economics is based on general equilibrium analysis which is
an extensive study of a number of variables working of the economic system as a
whole.
d) The
objectives of micro economics on demand side is the maximize utility whereas on
the supply side is to minimize profits at minimum cost. On the other hand, the
main objectives of macro economics are full employment, price stability,
economic growth etc.
19.
Explain the four main sectors of an economy from macroeconomic point of view.
Ans: From
macro point of view, a modern economy has four major sectors which are called
basic economic agents of the economy. These major sectors include the
following:
1) Firms:
Firms are the producing units. They purchase or hire different factors of
production and produce a variety of goods and services.
2) Households
Sector: Households supply factor services to the firms and earn factor incomes
for supplying these productive services.
3) Government:
It maintains law and order situation in the country and provides other services
for public welfare. It also produces goods and services.
4) External
sector: In a modern economy, external sector plays an important role. External
sector receives payments for exports and makes payments for imports.