Economics For Managers
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Chapter 11 : Introduction to Macroeconomics
Development Of Macroeconomics
Objectives And Instruments Of Macroeconomics
Gross Domestic Product (GDP)
Full Employment
Price Stability
Sustainable Balance of Payments
Economic Growth
Instruments Of Macroeconomic Policy
Fiscal Policy
Monetary Policy
International Trade Policy
Exchange Rate Policy
Prices and Incomes Policy
Employment Policy
Basic Concepts In Macroeconomics
Stocks and Flows
Equilibrium and Disequilibrium
Statics and Dynamics
Chapter Summary
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In this chapter, we discussed the role of macroeconomic
variables in analyzing the problems in the economy. There are two types of
economic activity in an economy -- micro and macro. A problem or activity at a
firm level is a micreconomic problem or activity, while a problem or activity at
an industry level becomes a macroeconomic activity. Macroeconomics gained
importance after the Great Depression of 1930s.
The growth of macroeconomics led to various schools of thought such as Keynesian
economics, the Monetarists, supply side economics etc. The macroeconomic
performance of a country can be measured with the help of the gross domestic
product (GDP), the level of employment in the economy, and movements in the
price level. The government can use fiscal and monetary policies to achieve
macroeconomic objectives such as full employment, high level of output, stable
prices, rapid economic growth. |
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To regulate economic activity in an economy, the
government can use fiscal policy through which it can monitor
government expenditure and mobilize resources. Since money is the
medium of exchange, the monetary policy has a significant role to
play in an economy. The central bank of a country controls the money
supply of an economy by reducing bankrates, openmarket operations,
etc.
Policies on exchange rate, international trade, employment, price
and income also play an important role in achieving macroeconomic
objectives. The government can control domestic and international
trade with the help of the EXIM policy. The chapter also examined
basic concepts of macroeconomics such as statics and dynamics,
stocks and flows, and equilibrium and disequilibrium.
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Short Case Studies / Caselets