Difference between micro and macro economics
Difference between micro and macro economics notes
There have been competing explanations for issues such as inflation, recessions and economic growth. Similarities between microeconomics and macroeconomics Although it is convenient to split up economics into two branches — microeconomics and macroeconomics, it is to some extent an artificial divide. Microeconomics deals with an individual product, firm, household, industry, wages, prices, etc. Knut Wicksell schools of thought dominated economic theory. At this point, your income becomes the determinant factor considering that you have to decide on how much to spend on the apartment, how much to spend on other basic needs, as well as how much to save. High development rates also mean improved living standards given that people can comfortably own homes, cars, and many other luxurious things. Basically, it focuses on the behaviour and performance of aggregate variables and those issues which affect the whole economy. There is little debate about the basic principles of micro-economics. The science of microeconomics covers a variety of specialized areas of study including: industrial organization, labor economics, financial economics, public economics, political economy, health economics, urban economics, law and economics, and economic history. While macroeconomists study the economy as a whole, microeconomists are concerned with specific firms or industries. How do people decide what amount to save for future contingencies? Scarcity: an inadequate amount of something; a shortage Microeconomics deals with the economic interactions of a specific person, a single entity, or a company. Macro economic analysis This looks at all goods and services produced in the economy. Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole.
The inflation rate High inflation rate means increased prices. Microeconomic problems are many.
Price stability is not necessarily zero inflation; steady levels of low-to-moderate inflation is often regarded as ideal. If you study the impact of devaluation, you are likely to use same economic principles, such as the elasticity of demand to changes in price.
Learning Objectives Recognize questions addressed by microeconomics and macroeconomics Key Takeaways Key Points Microeconomics and macroeconomics both focus on the allocation of scarce resources. What sources of finance are to be used by the firm to commence or operate the business?
A lot of microeconomic information can be gleaned from the financial statements. Macro economics places greater emphasis on empirical data and trying to explain it.
Difference between microeconomics and macroeconomics pdf
You must have balanced decisions You can never go up against the force of gravity unless you put other mechanisms in place; like utilizing advanced technological equipment that gives you balance in the space. The act of settling on a given choice and foregoing the other is called an opportunity cost since an individual or business has to calculate first, the cost of foregoing the next best alternative. The Government acts on behalf of its citizens by shouldering all their economic concerns and hence providing effective solutions to these concerns. External balance occurs when exports roughly equal imports over the long run. Some of the most common focuses of macroeconomics include unemployment rates, the gross domestic product of an economy, and the effects of exports and imports. The act of foregoing these events is known as the opportunity cost. Differences Between Macroeconomics and Microeconomics Macroeconomics Macroeconomics is the study of the performance, structure, behavior and decision-making of an economy as a whole. Macro takes a longer view and tries to predict via its models how the economies of countries interplay, both now and in the future. Video: Micro Economics Vs Macro Economics Micro Economics Pros: It helps in the determination of prices of a particular product and also the prices of various factors of production, i.
based on 32 review