In recent years macroeconomics has
acquired much importance. It is useful in many ways.
1.
Provide
Aggregate data for Policy Formulation: At the national level government
requires a lot of data for policy formulation. The data are collected by
various ministries and their departments. E.g. Central Statistical
Organisation, RBI, Ministry of finance, collects data for their use. These
policies are essential for the development of the country. Hence the study of
macroeconomics becomes significant for formulation and implementation of
policies.
2.
Basis for
Monetary Policy: Governments collect aggregate statistics that are
indispensable for the formulation of monetary policy in the country. Aggregate
statistics are the first pre-requisite for the formulation of the budget, for
declaration of subsidy and control of money supply and credit in the economy.
3.
Helps in
Understanding the Working of the economy: It is not only difficult but also
almost impossible to understand the complexities of the economic system without
the study of macroeconomics. Our main economic problems are the product of
complex macroeconomic relations. National income employment data are essential
to understand the working of the economy.
4.
Essential
for Microeconomics: The study of aggregates is the basis for the
formulation of micro economic problems. For understanding the essential law of
microeconomics the study of aggregates is essential. For example, the law of
diminishing marginal utility could not have been formulated unless the
experiences of masses of individuals had been collected and analysed.
5. Study of the Welfare of the Citizens: The
study of macroeconomics is also essential for measuring the welfare of the
citizens and the overall standard of living in the country. Many national and
international organizations collect macroeconomic data and come to know the
state of welfare of the society.
6.
Level of
Inflation in the country: It is important to know the aggregate production,
aggregate demand and supply of commodities in a country. Similarly, in these days’
problem of price rise has assumed serious dimension. It is therefore essential
to know the aggregate money
supply and control inflation and deflation. These subjects have gained
considerable significance after the theory of effective demand put forward by
J.M. Keynes. The theory of inflation is an important subject of macroeconomics.
In contrast deflation is associated with a steady and sustained decline in the
price level. Deflationary tendencies are harmful for steady growth and
therefore need to be controlled properly. Only the constant vigilance of
aggregate data can remedy these serious maladies.
7.
Control
Exchange Rate: Although the fixed exchange rates are no longer a goal of
the governments but excessive fluctuations are also not good. Therefore,
governments collect aggregate statistics and work for stabilization of exchange
rate.
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