Key Differences between Micro and Macro Economics It ascertains the level of economic activity in the economy? What is the rate of unemployment, poverty and inflation in the country? What are the issues that result in speeding up or slowing down of the economy? What is the standard of living of people in the country? What is the cost of living in the country?įurther, macroeconomics not only discusses issues with which the economy goes through but also helps in resolving them, thereby enabling it to function efficiently. Here we discuss, how the equilibrium is attained as a result of changes in the macroeconomic variables. It includes regional, national and international economies and covers the major areas of the economy like unemployment, poverty, general price level, total consumption, total savings, GDP (Gross Domestic Product), imports and exports, economic growth, globalisation, monetary/ fiscal policy, etc. Basically, it focuses on the behaviour and performance of aggregate variables and those issues which affect the whole economy. In macroeconomics, the entire economic phenomena or the overall economy is talked about. It also determines what products and how many products the firm should manufacture to sell? At what price the firm should offer its goods and services to the target audience? What sources of finance are to be used by the firm to commence or operate the business? How many and at what rate the workers are to be hired to work for the firm? When should the firm expand, downsize and close the business? Definition of Macro Economics Microeconomics analyzes how individuals and households spend their income? How do people decide what amount to save for future contingencies? What set of goods and services best fulfils their needs and wants, in the limited income? Here, the demand plays a key role in determining the quantity and the price of a product along with the price and quantity of related goods (complementary goods) and substitute products, so as to make a judicious decision regarding the allocation of scarce resources, concerning their alternative uses. It ascertains how the limited resources are allocated among various individuals to satisfy their wants? As well as it specifies the conditions for the best possible utilization of the resources, in order to attain maximum output and social welfare. Microeconomics is the branch of economics that concentrates on the behaviour and performance of the individual economic agents within the economy such as consumers, family, industry, firms, etc. It has been analyzed that 'Fallacy of Composition' involves, which sometimes doesn't proves true because it is possible that what is true for aggregate may not be true for individuals too.
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In microeconomics it is assumed that there is a full employment in the society which is not at all possible. It is based on unrealistic assumptions, i.e. 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. Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) within the economy. Theory of National Income, Aggregate Consumption, Theory of General Price Level, Economic Growth.Ĭovers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.Ĭovers various issues like, national income, general price level, distribution, employment, money etc.
Theory of Product Pricing, Theory of Factor Pricing, Theory of Economic Welfare. It assumes that all micro-economic variables are constant. It assumes that all macro-economic variables are constant. The branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.Īpplied to operational or internal issues
The branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics. Contents: Micro Economics Vs Macro Economics Here, in the given article we’ve broken down the concept and all the important differences between microeconomics and macroeconomics, in tabular form, have a look. There are two broad categories into which Economics is classified, i.e. Economics has been divided into two broad parts i.e. ‘Economics’ is defined as the study of how humans work together to convert limited resources into goods and services to satisfy their wants (unlimited) and how they distribute the same among themselves.
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