Introduction:

Macro economics is that branch of economics which deals with the study of aggregate or average behavior of the entire economy. In it we study the collective functioning of the entire economy. It deals with the aggregate of the economic system rather than with the individual parts of it. Hence it is called as aggregative economics. It splits up the economy into big lumps for the purpose of the convenience of the study. Hence it is called as lumping economy. The merits and demerits of macro economics.

Definition: in the words of professor bolding, “microeconomic deals not with individual quantities but with aggregate of these quantities, not with the individual income but with national income, not with individual prices but with prices levels, not with individual output but with National output.

Merits:

1. Provides description: It tells about the collective functioning of the whole economy: it helps us understand the working of a complex economy system. Also it helps to know the overall performance of an economy in a comprehensive behavior.
2. Wider scope: It is much wider scope as it includes topics like national income, unemployment, trade cycle, poverty, inequality etc. which have national calculation. It is a basis for forming and implementing economic policies. Its knowledge is necessary for determining the prospective of economic growth in a country.
3. Helps in the formulating economic policies: It is a basis for formulating the various National economic policies like monetary policy, fiscal policy, industrial and labor policy etc.
4. Helps in formulation of micro economic theories: It helps in the formulation of various microeconomic theories like the law of diminishing marginal utility, consumer surplus, demand and supply etc.
5. Easy understanding of microeconomics: The study of macroeconomics makes the understanding of microeconomics much easier for example; if we study the national income and total population of the country it becomes easier to know the per capita income of a person.
6. Measure the volume of economic welfare: It helps to measure the level of living standard of the people in a country depends upon the level of national income, the volume and quality of goods and services consume by the people.
7. Helps in international comparison: Macroeconomic helps to make international comparison of different economics of the world
8. Forecasting economic activities: On the basis of the study of the relationship among the various aggregate, it can make reasonable prediction regarding the behavior of different micro economic variables. for example the expected rate of economic growth, the volume of imports to be made etc

Demerits:

1. Excessive generalization: One of the important defects of macroeconomic is that it indulged in excess generalization. For example per capita income is obtained by dividing the national income by total population of the country. But the actual income of an individual may be either higher or lower than the average income thus what is true in case of the entire economy may not be true in case of individual.
2. Relationship between aggregate: The study of aggregates will be significant and meaningful only when they are functionally related for example aggregate demand should be equal to aggregate supply, if aggregate demand is equates to aggregate saving then it is meaningless.
3. The problem of aggregation: The study of aggregates provides more scientific result only when there are homogeneous in nature. For example the average mark of art section can be obtained by dividing it by total number of arts student if the class consists of few arts, science and commerce and management student in that case average mark of art section is illogical and unscientific.
4. Aggregate change: may not affect all section of society in the same manner: aggregative change effect different groups of people in a different manner for example a 10% rise in price level will have adverse effects on consumer while it will have favorable effect on sellers.
5. Difficulty in the measurement aggregates: Measurement of aggregate itself present serious problem for example if gross domestic savings goes up by 20% it does not mean that the savings of all individual have gone up by 20% it is only the average increase in savings of the people in a society.
6. Implies that new policies are not required: If the government is solely guided by macroeconomic analysis, it means it may lead to the believe that no change have assume in the entire system even though there are considerable changes in different sector of the economy. For example agriculture prices may come down by 10% and industrial product prices may go up by 10%. in that case there is no change in general price level as the two sides of price changes are neutralize by each other. But actually, price support policy is required in case of agriculture price and price control policies required in case of industrial policy goes to stabilize in the general price.

also read: also read: explain the subsistence theory of wages.