Monday, 20 February 2012


Following are the main limitations of macro economics:-

1.Excessive Thinking:-Macro economics suffers from the limitations that it always excessively thinks in the terms of aggregates and presumes circumstances to be normal and homogeneous but aggregates may result into heterogeneous character.As Prof.Boulding points:
(a) Six apples+Seven apples=Thirteen apples which constitutes a meaningful aggregate.
(b) Six apples+Seven oranges=Thirteen fruits,which constitues a fairly meaningful aggregates.
(c) Six apples+Seven shoes constitutes a meaningless aggregates.
2.Difference in individual items:-Sometimes while aggregating the variables,the basic characteristics of the data or the variables is left untouched because there are important diffrences in the items.Sometimes,the features of individual components may not be true to the aggregate so macro suffers from the danger of excessive generalisation.
3.Unable to influnce society equally:-An aggregative tendency may not influence the entire sectors of the economy in the same way.For example,a genral rise in price as inflation may not similar effects on different sectors of the economy.
4.Contradictory:-In aggregates,sometime the contradictory individual aspects are neutralised as in case of the estimation,prices in agriculture fall,of industrial products rise which have different affects on individual factors but as an aggregate,there may not be any effect at all.Thus,macro aggregate reslts may be misleading.
5.Role of less aggregative analysis:-Aggregates itself suffer from certain serious problems due to statical techniques.The recently introduced computational procedures and programming techniques hane reduced the role of aggregative analysis.

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