Limitations of Macroeconomics

 



Limitations of Macroeconomics




Though macroeconomics have various advantages and its quite popular, its not free of its limitations. Lets have a look


  1. Dependencies on Individual events
    • It is not necessary that what is right for a group, would also right for other groups or individuals.
  2. Heterogenous units
    • It is very difficult to measure the aggregates for heterogenous units.
    • Though units are measured in terms of money, its not a true measure of value in use, it is very difficult to measure the aggregates for heterogenous units.
  3. Structure of the aggregate is more important than aggregate itself
    • The composition of the structure of aggregate influences the economy is more complex than the aggregate itself
  4. Different effects of aggregates
    • It does not study different effect of an aggregate  on different sectors of economy
    • Aggregates does not have uniform effect on all sectors of an economy
  5. Limited application
    • Most of models available in macroeconomics does only have theoretical significance
  6. Ignores contribution of individual units
    • As compare to individual units, a group of units is given more importance in Macroeconomics.
    • It is not necessary that what is right for individual person, would also right for a group. 
    • For example, an individual can withdraw the amount saved in a bank at a time but if all individuals do the same, the banks will have to close down.
  7. Difficulty in Measuring Aggregates
    • Under macro economics, measurement of aggregates becomes very difficult. The reason is that there are numerous items in a group, which are sometimes not possible to measure separately.
  8. Danger in Ignorance of Individual Units
    • When we study a group under macro economics, there is always a danger that we may ignore the numerous individual units which form the group.





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