Economics is the study subject that helps build and improve our economy. Economics is essential for the country because it analyzes historical and present trends, and understands predictions. A country can’t grow without an economy. In this blog, we discuss the difference between microeconomics and macroeconomics.
Economics is the social science subject that studies economic activity. It deals with the production, distribution, and consumption of goods and services. Individuals, businesses, and governments make decisions for their resources through economics.
Economics has divided into two parts: microeconomics and macroeconomics.
Microeconomics is the study of the individual agent, whereas Macroeconomics is the study of aggregate variables. Microeconomics studies individual behavior and decision-making, while Macroeconomics studies aggregates such as unemployment rates and gross domestic product. Before we start discussing the difference between microeconomics and macroeconomics let us discuss both the terms individually.
What is Microeconomics?
The word ” Micro” has been taken from the “greek” language.
MIKRO- Micro that means small
Microeconomics is the study of making decisions by the individual and businesses for resources and prices for goods and services. It is the bottom-up approach of the economy. Microeconomics aspects are
- Demand, Supply, and Equilibrium
- Production theory
- Costs of Production
- Labour Economics
Example of Microeconomics: Individual income, Individual Output
The word ” Macro” has been taken from the “Greek” language.
MAKRO- Macro that means Large.
What is Macroeconomics?
Macroeconomics is the study of making decisions by the nation or aggregate economy. Macroeconomics studies concepts like economic growth, national income, gross domestic product (GDP). Macroeconomics is a Top-down approach. Macroeconomics aspects are:
- It studies the overall economic growth of a country
- It helps to solve economic problems such as poverty, unemployment, inflation, deflation, and more.
- Investment expenditure
Example of Macroeconomics: National income, National Output
What is the Difference Between Microeconomics and Macroeconomics
Below we have discussed the difference between microeconomics and macroeconomics:
|1||Meaning||Microeconomics is the branch of economics that studies the behavior of individual units of the economy.||Microeconomics is the branch of economics that studies the behavior of whole (country, government) units of the economy.|
|2||Derived From||Greek word “mikro” which means small||Greek word “makro” which means large|
|3||Tools||Demand & Supply||Aggregate Demand & Aggregate Supply|
|4||Objective||It aims to determine the prices for goods and services or production, economic welfare, production, consumption, etc.||Its goal is to determine the economy’s income and employment level and distribution, etc.|
|5||Application||It applies to internal issues||It applies to external issues|
|6||Other Name||It is also known as “Price Theory.”||It is also known as “Income and Employment Theory.”|
|7||Examples||Example of Microeconomics: Individual income, Individual Output||Example of Macroeconomics: National income, National Output|
After understanding the difference between microeconomics and macroeconomics, let’s discuss the advantages and disadvantages of microeconomics and macroeconomics.
Advantages of Microeconomics
- Efficient allocation of resources
- Useful in business decision-making
- Formulation of public policies
- Set your Price of Goods and services
- Study of human behavior
Disadvantages of Microeconomics
- Unable to analyze the certain problem
- Pure capitalism
- Assumption of full employment unrealistic
- Differences within Aggregates
- Unable to analyze the whole economy
Advantages of Macroeconomics
- macroeconomics covers the whole economy
- It helps in the analysis of national income and GDP
- It helps effective economic policy for the government
- Functioning of an Economy
- Understanding and Controlling Economic Fluctuations
Disadvantages of Macroeconomics:
- Problems of Measurement of Aggregates
- Possibility of Wrong Predictions
- Limited Application
- Ignore Individual units
What are the Similarities Between Micro and Macro Economics?
We hope, you understand the difference between microeconomics and macroeconomics, now let’s begin with similarities between both terms. Microeconomics and macroeconomics are both largely concerned with how people spend their money, but they have different perspectives on the same issue. Microeconomics is more about individual behavior, and macroeconomics is more about aggregated national data.
Microeconomic theory mainly deals with individual behavior. This includes a person’s decisions on how much to buy when to buy, where to buy, and why they make these decisions. Macroeconomic theory instead deals with national aggregates such as GDP, unemployment levels, and the level of inflation across an entire country or region of the world.
Which is better microeconomics or macroeconomics?
When we talk about the Difference Between Microeconomics and Microeconomics there are so many factors you need to consider. In contrast, macroeconomics is a more macro-scale view of economics that looks at the gross domestic product (GDP), unemployment, interest rates, and inflation. Microeconomics, on the other hand, focuses on specific markets and how they operate.
Microeconomics is better suited for people who want to become economists or professors because it requires more in-depth economics and mathematics knowledge. Macroeconomics would be better suited for people who want to obtain a managerial position in a company or government agency.
We hope you learn the concepts of economy and the difference between microeconomics and macroeconomics. You can know the difference from examples like Microeconomics (Individual income, Individual Output) while Macroeconomics (National income, National Output).
FAQs (Frequently Asked Questions)
What is the difference between macroeconomics and microeconomics?
Microeconomics is the branch of economics that studies the behavior of individual units of the economy. Whereas, Microeconomics is the branch of economics that studies the behavior of the economy’s whole (country, government) units.
Examples of Microeconomics and Macroeconomics?
Microeconomics example- Individual income, Individual Output, individual savings, price of goods and service.
Macroeconomics example: National income, National Output, Aggregate Demand, Aggregate Supply, Poverty and unemployment.