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What Is The Importance Of Macroeconomic Theory?

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Sudipa Sarkar answered
The study of macroeconomic theory is important for several reasons.

(I) It provides us with tools by which we can judge the performance of an economy. The performance of an economy is judged by the Gross National Product (GNP) of the economy.
(II) It is generally assumed that the objective of the government in any country is to raise the material well being of the country. Now the question is how to define the material well being of the country. These questions are discussed in welfare economics which forms a part of macroeconomic theory.
(III) Macroeconomic theory is also useful to the government for formulating appropriate policies such as monetary policy, fiscal policy, income policy, etc.
(IV) In many developing countries the objective of the government is to promote economic development. For this the government should know the factors influencing the process of economic development so that these factors can be manipulated. For this reason also the knowledge of macroeconomic theory is essential.
(V) For any business firm the knowledge of macroeconomic theory is required.
(VI) From the theoretical standpoint also the knowledge of macroeconomic theory is necessary.

From the above points it is clear that the study of macroeconomic theory is useful not only for individuals but also for firms and government.

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