Answer in detail
1) Explain the basic concepts of macro economics.
Ans: Introduction: Macroeconomics is a branch of economics which deals with aggregates or whole economy.
Following are the basic concepts of macroeconomics.
i) National Income:
(a) It is total income of a country.
(b) In economic sense, it is an aggregate money value of all final goods and services produced in an economy during one year.
(c) Net income from abroad is also included.
Savings is that part of income which is kept aside for satisfaction of future wants by foregoing current consumption.
Saving = Income – Consumption
It means creation of physical stock of capital through mobilization of savings, e.g. machinery, equipments, etc.
(iv) Trade Cycle:
There is always fluctuation in business. There are ups and downs in the overall economic activities. Ups and downs are due to inflation and deflation.
(v) Economic growth:
(a) In general sense economic growth means an increase in the real national income of the country.
(b) It is a quantitative concept.
(c) It is a spontaneous and reversible process.
(vi) Economic development:
(a) It indicates growth plus progressive changes in certain important variables.
(b) It is a multi-dimensional concept.
(c) This is a much wider and qualitative concept.