Distinguish between microeconomics and macroeconomics.
Economics has two major branches microeconomics and macroeconomics
The branch of economics which deals with behaviour of individual economic unit like individual firm or a consumer or demand for a commodity is microeconomics.
The branch of economics which deals with the behaviour of economy as a whole is macroeconomics like study of national income aggregate consumption extra.
Both the branches microeconomics and macroeconomics are interrelated and complementary to each other. Every microeconomic problem involves macroeconomic analysis and every macroeconomic problem requires microeconomic analysis yet there are certain differences between them –
Points of Difference | Micro Economics | Macro Economics |
1. Meaning | It is the study of individual economic units | It is the study of the economy as a whole |
2. Deals with | Individual economic variables like individual demand, etc | Whole or total economic variables like aggregate demand, etc |
3. Objectives | Allocation of resources and price determination | Determination of national income and employment of resources |
4. Business Application | Applied to operational or internal issues | Applied to external and environmental issues |
5. Importance | It is helpful in determining the prices of a product along with the prices of factors of production. | It maintains stability in the general price level and resolves the major problems of economy like inflation, deflation, unemployment, etc |