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Microeconomics and macroeconomics are two of the largest subdivisions of the study of economics wherein micro- refers to the observation of small economic units like the effects of government regulations on individual markets and consumer decision making and macro- refers to the 'big picture' version of economics like how interest rates are determines and why some countries' economies grow faster than others'.
According to comedian P.J. O’Rourke, “microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about the money you don’t have, and macroeconomics is about money the government is out of.”. Microeconomics is the study of the behaviour of the individual units (like an individual firm or an individual consumer) of the economy. According to these units, we may see these examples:. Firms:. Demand and Supply of commodities & determina. Some of the most prominent uses of macroeconomics are to set the general price level for the products and to dealt with issues like inflation, poverty, and unemployment. Microeconomics vs. Microeconomics is the study of economics on the individual level, whereas macroeconomics is the study of economics on the national or global.
According to comedian P.J. O’Rourke, “microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about the money you don’t have, and macroeconomics is about money the government is out of.”
Although this humorous observation pokes fun at economists, the description is accurate. However, a closer observation of both fields of economic discourse will provide a better understanding of the basics of economic theory and study.
Microeconomics: Individual Markets
Those who have studied Latin know that the prefix “micro-“ means “small,” so it shouldn’t be surprising that microeconomics is the study of small economic units. The field of microeconomics is concerned with things like
Put another way, microeconomics concerns itself with the behavior of individual markets, such as the markets for oranges, the market for cable television, or the market for skilled workers as opposed to the overall markets for produce, electronics, or the entire workforce. Microeconomics is essential for local governance, business and personal financing, specific stock investment research, and individual market predictions for venture capitalistic endeavors.
Macroeconomics: The Big Picture
Macroeconomics, on the other hand, can be thought of as the “big picture” version of economics. Rather than analyzing individual markets, macroeconomics focuses on aggregate production and consumption in an economy, the overall statistics that macroeconomists miss. Some topics that macroeconomists study include
To study economics at this level, researchers must be able to combine different goods and services produced in a way that reflects their relative contributions to aggregate output. This is generally done using the concept of the gross domestic product (GDP), and goods and services get weighted by their market prices.
The Relationship Between Microeconomics and MacroeconomicsMicroeconomics Vs Macroeconomics Difference
There is an obvious relationship between microeconomics and macroeconomics in that aggregate production and consumption levels are the result of choices made by individual households and firms, and some macroeconomic models explicitly make this connection by incorporating 'microfoundations.'
Microeconomics Vs Macroeconomics Exa…
Most of the economic topics covered on television and in newspapers are of the macroeconomic variety, but it’s important to remember that economics is about more than just trying to figure out when the economy is going to improve and what the Fed is doing with interest rates, it's also about observing local economies and specific markets for goods and services.
Microeconomics Vs Macroeconomics
Although many economists specialize in one field or the other, no matter which study one pursues, the other will have to be utilized in order to understand the implications of certain trends and conditions on both the micro and macro economic levels.
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