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BASIC CONCEPT OF
MACRO ECONOMICS
Definition of Macro economics
• Macro economics deals with total or aggregate
level of output, aggregate level of consumption,
aggregate level of investment, aggregate level of
employment and general price level in economy.
– Unemployment
– Inflation
– Output growth
1. Unemployment
Unemployment refers to the situation where the population of a
country do not find work to earn their livelihood.
• Unemployment represents that ratio of labor force which fails to get
employment.
• The unemployment rate is a key indicator of the economy’s health.
• The existence of unemployment seems to imply that the aggregate
• labor market is not in equilibrium.
2. Inflation
• Inflation is an increase in the overall price level.
• Hyperinflation is a period of very rapid increases in the
overall price level. Hyperinflations is a rare phenomenon.
Problem of Unemployment:
• During 1930 the phenomena of unemployment got a lot of
attractions. Policy makers presented their ideas to remove
unemployment .
• MacroeconomicsMACROECONOMICS
is the study of aggregates or averages
covering the entire economy, such as total employment,
national income, national output, total investment, total
consumption, total savings, aggregate supply, aggregate
demand, and general price level, wage level, and cost
structure.