Economics is a social science. Paul Samuelson calls it the queen of social sciences. It is concerned with the solution of society economic problems. In fact, many of the world’* most pressing problems, such as unemployment and inflation, budgetary deficits and public debt international trade and protection, are economic in nature.
The events and patterns of the last 30 years — inflation rates that have soared and declined, high unemployment, recession and recovery-have made a dramatic impact on economic thinking. They have all generated additional interest in the subject matter of economics. People all over the world are now trying to more fully understand these continually unfolding economic events.
Vital theories or studies of macroeconomics are:
(i) Theory related to equilibrium level of output and employment.
(ii) Theory related to inflationary and deflationary gap in the economy.
(iii) Theory of multiplier.
(iv) Study of government budget.
(v) Study of exchange rate and Balance of Payments (BoP).
