As we know that Macroeconomics is on large scale. For macro economics we must keep in mind the supply and demand chain and must have to balance that chain. For this purpose we must have to create flexibility in both these factors to adjust them accordingly.
Let’s see the first factor which is of demand. For a proper supply we should keep in mind the amount of demand first. For this reason we have selected the demand factor to be discussed first.
How demand is measured? This question is of great importance on macro level. Demand is measured on the basis of utility. In other words we can say that utilities define the demands. There are two types of utilities marginal and total. Marginal utilities are the defined utilities in defined resources while total utilities mean to fulfill all the desires of a person or a group of people when we are talking on the macro level. One must go with defined marginal utilities to make sure the stability of economy. If we start utilizing things on our desire then a lot of things would be wasted and we will suffer from economic crisis. Marginal utilities are safest way towards the economic progress.
We have to monitor various factors while defining utilities. One of these is to control the increment or decrement of real wealth. You will be thinking what is the real wealth? To understand this you have to accept a fact that when the wealth of a person is increased his/her demands for more and better goods will increase. This behavior is however less at higher levels because at higher levels people are well established and they save these saving for future investments and for the betterment of further future. So you should keep a balance of everything and avoid throwing off your assets for meaningless things.
Let us discuss the supply issue. If we look at this issue then we should first know the total budget of a country on macro level. When we are clear of all the facts and figures then we can distribute all these assets appropriately according to the demand and utility of the things. Supply also depends on various factors. Few of them are number of resources, production rate and various others.
If we properly monitor both demand and supply then we can create stability by showing flexibility in both of them. This is really important for the economic progress of a country.