Macroeconomic theories and application of these theories lubricate the performance, behavior and structure of the economy on a very broad perspective. Considering the scope of expenditures and budget of the government, macroeconomic theories address those areas that can be utilize in order to enjoy economic stability and growth. Macroeconomic theories also help economists to predict the possible opportunities and threats for a particular economy therefore they enable the policy makers to formulate responsive strategies to avail future opportunities and to restrict future threats.
Macroeconomic tools like GDP, unemployment rates and price indices helps economist to estimate the efficiency of the economic activities. These tools are also used as indicators that represent the performance of a particular economy. From the perspective of investors, macroeconomic theories allow policy makers to decide either to lower interest rate or raise interest rate. The theories of macroeconomics if implied on their merit can help economists to have a deep insight on the activities of economy under consideration. These theories would also enable them to estimate well before in time the consequences and outcomes of economic policies. These theories also assist individual investors to follow constructive business decisions.
It is important to know that macroeconomic theories do not only benefit economy by addressing the broader issues, in fact macroeconomic theories also answers the economic questions that are of more concern for an individual. The theories of macroeconomics presents answer to the questions like, what are the reasons of unemployment. Why inflation is cruising high? What can be done to cope with unwanted economic situation? Etc. Two major macroeconomic policies that have direct impact over individuals, small businesses, large corporations, governments and economy as whole are monetary policy and fiscal policy. These policies are developed to resist against any possible economic shock. These two critical policies, i.e. monetary policy and fiscal policy allows government and authorities to define a particular direction for all economic activities. These theories also help government to control unfavorable events like inflation and unemployment.
The theories of macroeconomics will provide government broad perspective and basic principles as to control issue like, taxation, inflation, government expenditures, government income, unemployment and many more. The GDP that is perceived to be the most important indicator of the economy is dependent on the execution of different macroeconomic theories. In conclusion it can be concluded that macroeconomic theories can set a road map for the governments that can lead their respective economies to boost. If these theories are designed for the welfare of individuals it can offer such strategies that can boost the living standards of an individual.