1.

What are the limitations of Macro-Economics? Or ‘Although Macro-economics has gained maximum popularity, yet it is not free from limitations’. Justify this statement.

Answer»

Macro economics is the study of aggregates. It provides valuable information about different economic activities. But it is not free from defects or limitations. 

They main limitations of Macro economics are as follows:

  • Excessive generalization of facts: The major limitation of Macro economics is its excessive generalization of facts. What is true of an individual.component may not be true in case of aggregate.
  • To regard Aggregates as homogeneous: The main defect in Macro analysis is that it regards the aggregates as homogeneous without caring about their internal composition and structure. 
  • It does not provide a clear picture: The study of Macro economics does not provide clear picture about the economy. It analyses the economy in a brief manner instead of detailed study. So it does not provide a clear picture. 
  • Statistical and conceptual difficulties: The measurement of macroeconomic concepts involves a number of statistical and conceptual difficulties. These problems relate to the aggregation of micro economic variables. 
  • Problem of Aggregation: The economic aggregates become immeasurable and incomparable in real terms. So, it is very difficult to provide aggregate values of a particular variable. 
  • Macro economics is based on imaginary inferences: The conclusions drawn from aggregate tendency may not be true in case of individual study. For example, a general rise in price brings different situations for different sections of society. 
  • Macro-economics depends on Micro economics: Macro economic variables depend on the behaviour of Micro economic variables in the economy. Aggregate demand in the economy is simply the sum of demand at the micro level.


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