Ch. 1

• Income Theory


  Studies the concept of national income, its different elements, methods of measurement, social accounting, aggregate demand, aggregate supply, and causes of fluctuations in national income leading to business cycles like inflation and deflation
• Macro Economics


  • Policy-oriented science according to Keynes, suggesting suitable economic policies to promote economic growth, generate employment, control inflation, depression, etc.
• Lumping Method


  Study of the whole economy rather than its parts, emphasizing the difference between microeconomics and macroeconomics
• Importance of Macroeconomics

  • Gives an idea of the functioning of an economic system, helps analyze and control economic fluctuations, emphasizes the study of national income and social accounts, and aids in understanding economic development in developing countries
• Shares of rent, wages, interest, and profit in the total national income are studied in macroeconomics
• Growth Models


  Studies factors contributing to economic growth and development, useful in developing growth models like the Mahalanobis growth model
• General Equilibrium Analysis


  Deals with the behavior of large aggregates and their functional relationship, including demand, supply, and prices in the whole economy
• Interdependence in Macro Analysis


  Takes into account the interdependence between aggregate economic variables like income, output, employment, investments, price level, etc. Changes in one variable can affect others and lead to economic growth
• Macro Economics


  • Study of economy as a whole, aggregate concepts like national income, national output, employment, general price level, business cycles, etc.
• General Price Level


  Studies the determination and changes in the general price level, which is the average of all prices of goods and services currently being produced in the economy
• Income effect is when an increase or decrease in income causes changes in consumption patterns due to changes in purchasing power.