StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Explain the difference between macroeconomics and microeconomics. How are these two fields related - Essay Example

Cite this document
Summary
Explain the difference between macro economics and micro economics. How are these two fields related?" Economics is a social science that analyzes and describes the consequences of choices made regarding scarce resources. It is the study of how individuals and societies utilize those resources which lie in the following questions; what commodities and services will be produced, how they will be produced, and how they will be distributed among the members of the society…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.7% of users find it useful
Explain the difference between macroeconomics and microeconomics. How are these two fields related
Read Text Preview

Extract of sample "Explain the difference between macroeconomics and microeconomics. How are these two fields related"

Download file to see previous pages

In contrast, Macroeconomics is concerned with the national economy as a whole and provides a basic understanding of how things work in the economy. Microeconomics can be defined as the branch of economics in which we study about individual aspects like a firm or household. It is concerned with individuals making their choice about what is to be produced, how and for whom it is to be produced, and what price should be charged for it. Micro economics deals with the economic action and behavior of individual units and small groups of an economy (Sloman and Garratt, 2010).

It covers the following fields of the study: Price Theory Theory of Consumer Behavior Theory of Behavior of Firms Theory of Production Microeconomics has many theoretical as well as practical advantages. Few of them are: It helps in understanding the working of a free market economy It provides us a way for efficient employment of resources It covers some of the problems of taxation. It guides Business Executives in attaining maximum productivity Macro economics deals with the behavior or working of the whole economic system.

It is the study of aggregates or averages covering the entire economy. In contrast to microeconomics, macroeconomics is concerned with the conduct, arrangement decision-making performance of the entire economy. Macroeconomists studies the relationship between the following: National income National Output Total Savings Total Investment Total Consumption Total Unemployment International trade International finance By definition, Macroeconomics is very wide in its scope and study as it deals with the problems of unemployment, economic fluctuations, inflation, and deflation.

It is concerned with the effects of investment on total output, total income, and aggregate employment. The monetary discipline of the macroeconomics examines and analyzes the effect of the total quantity of money on the general price level. In the international trade sphere, it deals with the problems of balance of payments and foreign aid. The field of macroeconomics provides us fundamental theories which can help us in preventing depressions and recessions by allowing governments to formulate adjustments through changes within the macroeconomic policies (McConnel and Brue, 1997).

These policies are in general the monetary policy and fiscal policy of the state. The major differences that exist between micro and macro-economics are discussed briefly as follows (Mbaknol, 2011): S. No. Micro-economics Macro-economics 1. Aggregation Level Economy’s individual units are studied, like a particular product, a particular firm, etc. Problems of the economy are studied as a whole. The aggregates are studied, like national income, aggregate savings, etc. 2. Objectives Principles, problems and policies that are related to the best distribution of resources are studied in it.

In it the principles, policies and problems relating to the full employment of the resources and the development of those resources are covered. 3. Focus Price determination, Equilibrium of Consumer, Welfare and allocation of resources is dealt. National income, full employment, trade cycles, general price-level, economic growth, etc are dealt here. 4. Assumptions Ways for allocation of production and factors of production

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Explain the difference between macroeconomics and microeconomics. How Essay”, n.d.)
Retrieved from https://studentshare.org/environmental-studies/1410338-explain-the-difference-between-macroeconomics-and
(Explain the Difference Between Macroeconomics and Microeconomics. How Essay)
https://studentshare.org/environmental-studies/1410338-explain-the-difference-between-macroeconomics-and.
“Explain the Difference Between Macroeconomics and Microeconomics. How Essay”, n.d. https://studentshare.org/environmental-studies/1410338-explain-the-difference-between-macroeconomics-and.
  • Cited: 0 times

CHECK THESE SAMPLES OF Explain the difference between macroeconomics and microeconomics. How are these two fields related

The Main Factors For An Economic Growth

Human capital is not directly related to the macroeconomic conditions of each country.... Human capital, as a term used in the explanation of economic growth, is not directly related to the macroeconomic conditions of each country; however, its existence and its quality is reflected in these conditions.... At this point, the following problem appears: how can investment benefit quickly the local economy if bureaucracy sets obstacles in the completion of the relevant processes?...
7 Pages (1750 words) Term Paper

Detroit Economic Bailout

Microeconomic variables have a critical characteristic: they refer to economy as related to the level of households and not to the level of a region (Dow and Hillard 6).... The value of the bailout of Detroit can be understood by presenting the statistics related to the city's economic performance at household level.... The success of a similar plan used for the city's two major auto companies, Chrysler and General Motors (Maynard 2013) is often used for justifying the necessity of Detroit's bailout....
5 Pages (1250 words) Essay

Impact of the World Trade Organization on Intellectual Property Rights

Ricardo (1817) demonstrated the gains from free trade by an example between two countries, which can use comparative advantage.... The author focuses on the impact of the World Trade Organization on intellectual property rights, compares free trade and protectionist theories and analyzes within the context of the WTO how the global environment functions on a micro and macro level … The author concludes that WTO plays a crucial role in the regulation of trading policies in the international arena....
8 Pages (2000 words) Essay

Macroeconomics of Argentina

This research paper is one of the best examples of analysis of the macroeconomics of Argentina, which involves review of the monetary and fiscal policy, growth rates, unemployment rates, inflation, and currency exchanges in the country.... This paper talks about the recent trends in the macroeconomic development of Argentina....
5 Pages (1250 words) Research Paper

Single currency costs and benefits

This paper examines the issues related with the introduction and the application of a single currency strategy and also the monetary union which has been considered as 'the monetary unification of participating member countries in an economic union and involves the adoption of a common currency.... At the first level, it is stated that the Economic and Monetary Union have created a single market which is completed through the application of fixed exchange rates between the member states....
20 Pages (5000 words) Term Paper

Key Structural Changes in the Economy and Society that Takes Place in a Developing Country

hellip; “Economic stabilization is developing countries concern the attempts to solve the issues related to the excessive or unsustainable balance of payments deficits to reduce the amount of domestic inflation, it also involves exchange rate reform and changes in the systems of import protection”.... The range of deregulatory initiatives affecting domestic and international financial transactions includes the abolition of the capital and interest rate controls and entry of foreign investment to domestic markets and all these factors combines with technological progress has greatly reduced the transactions costs and widespread of financial innovations have broken down the barriers between the international economies....
9 Pages (2250 words) Coursework

Principles of Microeconomics in the Present Time

This means also taking into account taxes and regulations created by governments” (What's the difference between macroeconomics and microeconomics, n.... This looks at economy-wide phenomena, such as Gross National Product (GDP) and how it is affected by changes in unemployment, national income, the rate of growth, and price levels” (What's the difference between macroeconomics and microeconomics, n.... Numerous terms are associated with both macro and microeconomics....
7 Pages (1750 words) Research Paper

Theories and Models of Economics in the Construction Industry

nbsp; Modern economic theory also blends together microeconomics and macroeconomics, using microeconomic analysis as the basis for macroeconomics.... The exchange of information between buyers and sellers about factors such as price, quality, and quantity take place in a market.... nbsp;Economic models attempt to identify the relationships between the key variables and they simplify the processes in the sector.... ldquo;Economic models are simplified representations of the real world that we use to understand, explain and predict economic phenomena” (Myers 2004, p....
10 Pages (2500 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us