Macroeconomics vs. Microeconomics

Only available on StudyMode
  • Download(s) : 240
  • Published : February 15, 2012
Open Document
Text Preview
hese are two branches or rather methods of exposition of the science of economics. The distinction between them can best be explained by comparing their main features. As the terms suggest, macroeconomics deals with the market on a large-scale and its aggregate problems, while microeconomics concerns markets on a small-scale and individual aspects of the problems. There are six distinct aspects of the two approaches that are shown as in the following table:

Microeconomics

Macroeconomics

(a)

Units of the study

Individual consumers, producers workers, traders, etc.

Aggregate units such as state National or International economy.

(b)

Activities

Optimization and maximization of personal gains and profits.

Long term growth, maintenance of high levels of production and employment.

(c)

Origin

Micro activities emerge on the demand side of consumer’s choices.

Problems of long-term growth depend upon the supply of productive resources

(d)

Conditions

This approach is functional under static conditions and small time intervals.

This approach is functional under dynamic conditions and complex long run changes.

(e)

Methods

It is concerned with small adjustments, for which the application of a marginal method is suitable.

It deals with complex, dynamic changes inviting the use of advanced mathematical techniques.

(f)

Levels

Micro adjustments in resource A allocation are made in response to changes in relative prices of goods and services. The aggregate level of income or total economic activities is considered to be constant.

Macro approach attempts to find the conditions of long-term expansions in output as a whole, assuming relative prices as constant (or significant).

This distinction between micro and macroeconomics as presented above is only a matter of theoretical convenience. The two approaches are complementary...
tracking img