Introduction

1. Introduction • Contents 1. History of Macroeconomics 2. What is Macroeconomics? 3. Factors of Production 4. Economic Decision Makers 5. 4 Sectors of Macroeconomics

2. History of Macroeconomics • Huge unemployment was seen in 1929 at the time of “great depression”. • In USA the unemployment rate increased from 3 to 25 percent in between 1929 to 1933. • In 1936 after J.M.Keynes book The General Theory of Unemployment, Interest and money, Macroeconomics emerged. John Maynard Keynes

3. What is Macroeconomics? • It analyses aggregate output levels, price level or employment level, in the different production units of an economy. • It deals with the economy as a whole. • What policies do what to the economy?

4. Factors of Production • 1. Land - Rent • 2. Capital - Rent • 3. Labour - Wages • 4. Entrepreneur - Profit • The motive of the firm is mostly self centred and is to produce goods and services using factors of production and sell in the market for profits.

5. Economic Decision Makers • First type are defined by constitution or law of India • Reserve Bank of India (RBI). • Securities and Exchange Board of India (SEBI).

6. 4 Sectors of Macroeconomics • Firms: This are units that produces goods and services. Entrepreneurs are the ones responsible for the working of firms. • Government: the role of the states include framing laws, implementing and enforcing the laws. A part from imposing taxes the Government spends a lot of money on infrastructure and development activities.

7. 4 Sectors of Macroeconomics 3. Household Sector: this is the consumer side. The Household sector are the people who are involved as labours in the production. 4. External Sector: This include exports, imports and Capital flow from foreign countries into domestic country or domestic country to foreign countries.