Macro economics is based on following assumptions:-
1.Short period:-Macro economics theories are applicable in short period.In short period,investment can be increased by installing new plants,hiring number of labourers,tastes of the consumer,their habits and fashion remain constant.Lord keynes assumed that the problem of unemployment in developed countries was a short-term problem and not the long run because"in the long run-run we are all dead".
2.Perfect competition:-Macro economics assumes that perfect competitions prevails in the economy.Under the conditions of perfect competitions,there is no external interference in the determination of prices.Prices may increase or decrease according to changes in demand and supply position.
3.Closed economy:-Macro economics assumes that a developed capitalist economy is a closed economy.A closed economy refers to an economy which is free from the influence of foreign trade on income and employment level.
4.Money also acts as store of value:-Macro economics assumes that money is not only a medium of exchange but also a store of value.Therfore,it is not necessary that people must spend all their monetary income soon as they get it.
5.No time lag:-Macro economics assumes that adjustments among different economic variables take place without any time lag.For instance,consumption expenditure of a month depends upon the income of that particular month.It means present consumption is a function of present income.
6.Savings and investment:-Macro economics assumes that savings depends on income.On the other hand,investment depends on the rate of interest.
7.Optimum utilization of resources:-Macro economics also assumes that there is optimum utilization of resources.
1.Short period:-Macro economics theories are applicable in short period.In short period,investment can be increased by installing new plants,hiring number of labourers,tastes of the consumer,their habits and fashion remain constant.Lord keynes assumed that the problem of unemployment in developed countries was a short-term problem and not the long run because"in the long run-run we are all dead".
2.Perfect competition:-Macro economics assumes that perfect competitions prevails in the economy.Under the conditions of perfect competitions,there is no external interference in the determination of prices.Prices may increase or decrease according to changes in demand and supply position.
3.Closed economy:-Macro economics assumes that a developed capitalist economy is a closed economy.A closed economy refers to an economy which is free from the influence of foreign trade on income and employment level.
4.Money also acts as store of value:-Macro economics assumes that money is not only a medium of exchange but also a store of value.Therfore,it is not necessary that people must spend all their monetary income soon as they get it.
5.No time lag:-Macro economics assumes that adjustments among different economic variables take place without any time lag.For instance,consumption expenditure of a month depends upon the income of that particular month.It means present consumption is a function of present income.
6.Savings and investment:-Macro economics assumes that savings depends on income.On the other hand,investment depends on the rate of interest.
7.Optimum utilization of resources:-Macro economics also assumes that there is optimum utilization of resources.
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