Introduction to Macro Economics Class 12 Notes CBS
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Introduction to Macro Economics Class 12 Notes CBSE Macro Economics Chapter 1
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Introduction to Macro Economics Class 12 Notes CBS
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Sixth Year / 12th Grade
Introduction to Macro Economics. Macro economics is a branch of economics that deals with the study of economic processes that involve aggregates. Economic agents are individuals or institutions making economic decisions. The Great Depression had a significant impact on economics and led to the eme...
Introduction to Macro Economics Class 12 Notes CBS
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1. Macro Economics: Macro Economics deals with the study of economic
processes involving aggregates. It is derived from the Greek word 'makro,'
which means "large." The branch aims to investigate the economic
relationships or issues that affect an economy as a whole, such as total
consumption and saving. It also explores the principles, problems, and policies
associated with attaining full employment and expanding production capacity.
2. Economic Agents: Economic units or economic agents are individuals or
institutions that make economic decisions. They could be manufacturers or
service providers who decide what and how much to produce, or entities such
as the government, corporations, or banks that make economic decisions such
as how much to spend, what interest rate to charge on credit, and how much
to tax.
3. Great Depression: The Great Depression is widely regarded as the worst and
longest economic downturn or recession in modern history, starting in the
United States and having a cascading effect on the world's economies. It began
with the October 1929 stock market crash in the United States, causing panic
among Wall Street investors, resulting in the stock market losing nearly billions
of dollars. This led to the failure of major financial institutions, such as banks.
4. The depression was caused by an overabundance of food grains in the market,
which resulted in a drop in agricultural prices. Stocks of finished goods began
to pile up due to underconsumption and excessive investment, resulting in low
prices and low-profit margins. Money in the economy was converted into
unsold finished goods, resulting in a sharp drop in employment and income
levels. In the United States, the unemployment rate rose from 3% to 25%. The
Great Depression had significant implications and significance in economics,
leading to the collapse of the classical economic approach and paving the way
for the emergence of the Keynesian approach.
5. Capitalist Country/Economy: In a capitalist country, capitalist enterprises
perform most of the production activity. A typical capitalist enterprise has one
or more entrepreneurs who provide the capital required to run the enterprise
themselves or borrow it. The means of production is privately owned and
primarily governed by the price mechanism, with no intervention from the
government. The government's role is solely to maintain law and order, while
profit is the driving force behind these means of production. This economic
structure is also referred to as a free-market economy or laissez-faire.
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