![]() Let us now understand the scope of microeconomics and macroeconomics. Macroeconomics analyzes the fluctuations in business activities and helps in maintaining a stable price level. It allows determining the level of national income and employment with the help of aggregate demand and supply. Importance of Macroeconomics:Īs macroeconomics studies the entire economy of a country as a whole, it helps in understanding the functioning of a complex modern economic system. It allows to determine the working of a capitalist economy and the equilibrium price of a free economy. Microeconomics plays a vital role in formulating policies that help in enhancing production efficiency and result in greater economic welfare. The primary significance is that it helps in determining the prices of commodities in an economy. There is both practical and theoretical importance of microeconomics. ![]() Principles of Macroeconomics Macroeconomics comprises the following principles:īoth microeconomics and macroeconomics hold importance in their own area of application. The government policies and the factors influencing the economy of a nation are covered under the scope of macroeconomics. It analyzes the markets, businesses, industries, and governments on an overall basis. Macroeconomics deals with the performance, structure, behavior, and decision-making of the entire economy as a whole. It is the aggregate study of the economy of a nation. Macroeconomics is a study of the macro elements in economics. Principles of Microeconomics Microeconomics comprises the following principles: It studies how individuals or firms allocate their resources, and how it affects the utilization and distribution of their resources. ![]() ![]() Microeconomics generally analyzes the market and determines the prices of goods and services. The way these elements maintain their economy, that is, allocate their scarce resources and their interaction with other elements is studied under microeconomics. These microelements can be a single individual, a household, or a business firm. Microeconomics is the study of the microelements of the economy. The study incorporates the misconception of composition.īefore heading towards the difference between microeconomics and macroeconomics, let us first understand each branch of economics separately. Helps in dealing with critical issues like inflation, deflation, reflation, unemployment, and poverty in an economy as a whole. Helps in the determination of prices of products or commodities, along with the pricing of factors of production in an economy. Theory of economic growth and development, Theory of money, Theory of national income, Theory of international trade, Theory of employment, Theory of general price level Theory of product pricing, Theory of factor pricing, Theory of economic welfare Macroeconomics deals with several issues such as: National Income, Employment Distribution, General price level, MoneyĪpplied to external and environmental issues Microeconomics deals with multiple issues such as: Demand and Supply, Product pricing, Factor pricing, Production, Consumption, Economic welfare The aggregate or total market segments of an economy are included in the macroeconomics’ area of study. The area of study of microeconomics includes the particular market segment of an economy. Macroeconomics studies the aggregate variables of the economy of a nation. Microeconomics is the study of individual units of the economy of a nation. Difference between Micro and Macro Economics Basis This article will focus on understanding the two concepts – microeconomics and macroeconomics, and the major differences between micro and macroeconomics. These two branches of economics explain how economies work ranging from the economy of just an individual to the economy of an entire country. While microeconomics studies the individual units of a country’s economy, macroeconomics deals with the entire economy of a country as a whole. These are the two main categories of economics. The subject of economics comprises two branches – Microeconomics and Macroeconomics. It is the social science that deals with the production, consumption, and distribution of goods and services. Economics is a branch of knowledge that studies the financial structure of a nation and the factors influencing it.
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