Considering the entire society as a family it has unlimited wants which are ever-increasing and sources that are available to satisfy them are limited. If we break the word up, ‘Oikos’, means ‘Home’, and Nomos’, means ‘Management’. Economics is derived from the Greek word ‘Oikonomikos’. microeconomics and macroeconomics and their relationship, let’s first understand this interesting term economics. Well before we go on to see the two most important branches of economics viz. This article on Macroeconomics vs Microeconomics attempts to analyze and understand these issues and their effects on investors. Suppose you have 200 dollars with you, the choice of using that money to pay off your bill or spend it on an outing is all an economic decision. The economic condition of the country whether may it be inflation or unemployment directly affects our finances, growth, and many other areas that permit us to be self-sufficient in our lives. Economics influences the prices of the goods and services we buy, as well as the income we earn at our jobs. It is based on time-lags.What is Macroeconomics vs Microeconomics?Įconomics is omnipresent and forms an integral part of our lives. It is a static analysis it does not consider the time element. It focuses on issues that affect the whole economy. It focuses on issues that affect individuals, companies etc. Its objectives include full employment, price stability, economic growth etc. Its objective is to maximize utility or profit and minimize the cost. It helps stabilize the general price level and resolve major issues of economy like inflation, deflation, poverty, etc. It helps determine the price of a product or service along with other factors like cost of land, labor, machines etc. It deals with aggregate economic variables like inflation, poverty, unemployment rate, export and import etc. It deals with individuals economic variables like price of a product, individual demand etc. It is study of economy on a much larger scale like the overall economy of a geographical region, country, continent or the whole world. It deals with or studies the economic behaviour of individuals, households and companies. It focuses on aggregate economic variables like inflation, poverty, unemployment rate, export and import, national income etc.īased on the above information, some of the key differences between microeconomics and macroeconomics are as follows: Microeconomics It helps resolve various issues related to economy, thereby enables it function effectively. It studies the major areas of economy like poverty, fiscal and monetary policy, employment or unemployment rate, imports and exports etc, as reflected by the changes in the Gross Domestic Product (GDP) and business cycles. Macroeconomics is the branch of economics that studies the economies on a much larger scale like economy of a geographical area, a country, a continent or the whole world. Thus, It focuses on individuals economic variables like price of a product, individual demand etc. the demand and supply of a particular product, the production capacity of an individual or business, and the effect of regulations on an industry or business. It gives emphasis on the issues that affect individuals and companies, e.g. In this type of economy, the demand is the key factor in determining the quantity and price of a product in addition to the price and quantity of similar goods and services or substitute products, in order to make correct decision regarding the allocation of limited resources. In other words, it studies the behaviour of individuals, households, companies, industries etc. Microeconomics is the branch of economics that studies the behaviour and performance of the individual units like particular households, particular firms, particular industries, etc. Let us see how they differ from each other! Microeconomics: Economics can be divided into two parts, e.g. It studies how individuals, businesses, governments etc, work together to convert limited resources into goods and services to satisfy their wants and how they allocate resources between them to satisfy their wants and needs. Economics is a social science that deals with the study of production, distribution and consumption of goods.
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