The Pros And Cons Of Macroeconomics

1396 Words6 Pages
Any introduction to Macroeconomics starts with JM Keynes. He professed in his book, “The General theory of Employment, Interests and Money” that the governments can play a big role in harnessing the production capacity and generation of employment. The Government formulates the macroeconomic policy with a view to generate employment, raise the living standard of people, counter the inflation, reduce the economic inequality and regulate the foreign exchange levels. These factors have a direct correlation with the economic status of the nation, for instance, during recession time, the unemployment level soars. A major focus of macroeconomics is the total output generated within an economy. Measurement of that output includes nominal GDP and…show more content…
Then reserve bank or central bank will start adjust the prime lending rate, cash reserve ratio, statutory liquidity ratio, reverse repco rate and repco rate according to inflation. When the economy is growing fast it may lead to inflation or hyperinflation as said above, central bank uses its power to increases the various interest rates to make the lending more expensive to bank, business and consumers. This de-stimulates the purchasing activity at various level of economy. This will pull down the demand for the good and service offered by business, resulting the business will get slow down. Central bank uses this as tool to bring the stability in economy. Share Market (Sensex): Often it reflects the confidence of business and consumers on economy. Sometime collapse of share price affects the consumer and bAny introduction to Macroeconomics starts with JM Keynes. He professed in his book, “The General theory of Employment, Interests and Money” that the governments can play a big role in harnessing the production capacity and generation of

More about The Pros And Cons Of Macroeconomics

Open Document