![]() ![]() The aggregate economic behavior has its own modes and courses. In his opinion aggregate economic behavior cannot be the sum of individual activities. They used to generalist the results of individual analysis to explain the aggregate behavior of the whole economic system. ![]() They had confined economic analysis to the study of individual aspect of economic behavior. Mainly classical and Neo-classical economists developed micro- economics. Macro-economics helps to solve these problems. On the other imp hyper in hand, macro-economics studies the causes, effects and possible res for the solution of these problems. The study of micro-economics is not of much help to solve the important present day problems such as decline in national income, hyper inflation, widespread unemployment and so on. A Hence, it regards the variables like total employment, total output etc. Macro-economics does not assume full employment. Hence, it takes total employment, total output, and expenditure as given. Micro-economics assumes full employment of all factors including labour. Macro-economics, on the other hand covers the area as such as theories of income and employment, theories of money and price level, banking system, theories of economic growth and so on. Micro-economics covers the areas such as the pricing of products, pricing of factors of production, theories of economic welfare and so on. For example, we study the factors that determine the particular prices, but in macro-economics we study the factors that determine the general price level. On the other hand, macro-economics uses general equilibrium analysis for the study of the economic behaviour of the economy as a whole. It focuses on the study of particular consumer, firm, demand, output, price and expenditure. Micro-economics studies the individual equilibrium process by using partial equilibrium analysis. On the other hand, macro-economics studies the big aggregates or the aggregates related to the economy as a whole. But these aggregates are not related to the economy as a whole. Micro-economics also studies the small aggregates such as market demand, market supply, industry and so on. Study of aggregates in relation to economy as a whole But macro-economics includes the study of the aggregate variables such as aggregate demand, aggregate supply, national income, national saving, level of employment, level of price etc. Since micro-economics is the study of individual units it includes the study of the price of a commodity, income of an individual, output of a firm, demand and supply of a commodity. Thus, despite same origin micro-economics is the study of small individual units and macro-economics is the study of the aggregates of those units. Likewise, the term macro-economics was al from the Greek word 'makros' meaning large. The term micro-economics was derived from the Greek word mikros' meaning small. The main points of difference between Micro and Macroeconomics are as follows: 1. The distinction between them does not lie in subject matter but in methodology. ![]() Yet some differences can be found between them. ![]() For example, national income is a macro concept in the context of a country but is a micro concept in the international context. Micro in one situation may be macro in another situation. But the distinction between them is not clear-cut. On the contrary, macro-economics is the study of all the units combined together or the economy as a whole. Micro-economics is the study of individual units. What are the Difference between Micro and Macroeconomics? ![]()
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