Although macroeconomics deals with all the national
problems and provides various measures, it signifies various national
contemporary situations; it has some limitations in practical field. They are –
►Fallacy of composition: Sum total of individual
activities is aggregate economy. But what is true for individual may not be
true for whole economy. For e.g.
Individual (desirable) Whole (not) Result
Saving Saving I↓
epm↓ O↓
Deposit Deposit I↓
emp↓ O↓
Withdraw Withdraw inflation, whole banking system fail
►Macroeconomics always looks the aggregative aspect:
If high level and technical employment decreases and manual and blue color jobs
rise, macroeconomic data remain unchanged but economy affected.
►Statistical and conceptual difficulties:
Macroeconomic policies totally depend upon statistical details. If source of
data is not reliable and randomly selected, the policies applied to overcome
problems lead the wrong results.
►Aggregate variables may not be important necessarily:
A rise in national income does not mean rise in all individual income. So, an
economy as a whole is to be focused.
►Wrong use may mislead the economy: Critical and care less use of macroeconomic
variables may mislead the economy for e.g. any policy for whole economy may not
be right for all sectors and vice versa. This may bring unfavorable results.
►Trade- off relations between goals:
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