Differentiate Between Macroeconomics and Microeconomics

Microeconomics vs Macroeconomics

The term Macro originates from the Greek Letter Makros, whose denotation is Large. The father of macroeconomics is John Maynard Keynes.In macroeconomics, the term large is used to refer to the whole economy. Therefore, macroeconomics is the study of economics in which we deal with the economic issue at the entire level of the economy. In this study, we work for the welfare of a country. The economy’s welfare includes employment, output growth, and dealing with inflation or depression.

Inflation comes because of rising in the price of goods and depression occurs due to the lack of goods and services in different levels of the economy.

Below we will read macroeconomics and microeconomics difference 

Macroeconomics vs Microeconomics Difference

Defination

In microeconomics, we deal with the issues of scarcity and choice at an individual, a firm level. For instance: a household, industry, etc. In microeconomics, we observe how a consumer behaves towards his choice of goods and services in order to maximize his goods. The issues of shortage and choices at the level of an economy as a whole are studied In macroeconomics. Basically, we observe how natural resources should be used so that social welfare can be maximized.

Economics Variables

Microeconomics includes variables of consumer demand and producer supply. On the other hand, aggregate demand and aggregate supply are the economic variables of macroeconomics. Aggregate demand is the collection of demand for goods and services demand in the economy. On the other hand, the flow of goods and the flow of services is regarded as aggregate supply.

Economic Agents

Economic Agents are those agents who take economic decisions, such as individuals and institutions. Individual agents are consumers and producers. These types of agents give priority to their personal gains

On the other hand, institutional agents are state or statutory bodies. Institutional agents include, for example. The Reserve Bank of India makes a variety of choices to keep money flowing throughout the economy.

  • SEBI (Securities and Exchange Board of India) is a regulatory body in India.

These types of agents prioritize social welfare.

Degree of Aggregation

The degree of aggregation is limited in the case of microeconomics as compared to macroeconomics.In the study of microeconomics equilibrium of industry is observed. In this case, all types of industries are aggregated which are producing commodities.The equilibrium of the economy as a whole is observed in macroeconomics. In this, all types of economic units of the economy are aggregated. For instance, agricultural, industrial, and service sector economic activity is observed in macroeconomics.

Distinct Set Of Assumptions

Micro and macroeconomics have their own different set of assumptions. Certain variables might be content in Microeconomics but not in Macroeconomics. The vice-versa is also true. For example, total output and employment are constant in the case of microeconomics. But in the case of macroeconomics, the distribution of output/income is constant.

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Predominant Issues

The allocation of resources in microeconomics is the major issue of microeconomics. Resource management should be done in a proper manner so that maximum profit can be generated. The main issue in macroeconomics is the determination of overall output.

Study Strategies

Both follow different methods to study the economy. The method of study in microeconomics is described as general equilibrium analytics. On the other hand, the strategy of study in macroeconomics is partial equilibrium analysis.

Micro and Macro Contradiction

The logic might be different in micro and macro-economic. Sometimes the logic in microeconomics will not be logical in macroeconomics. To clearly understand this concept let us take an example: An individual who saves more contributes to his future property.

If people in the economy save more, then it will decline in demand for goods and services.In consequence, investment in the economy also declines and production and employment also fall. Poverty in the economy also rises.

Who Is the Father of Macroeconomics

John Maynard Keynes

The term microeconomics and macroeconomics were first given by

The term microeconomics and macroeconomics was first given by Ragnar Frisch in 1993.

Micro and Macro approaches are _____________

Micro and Macro approaches are complementary.Some logics which are vaild in microeconomics might not valid in macroeconomics.

Also Study:Scope of Macroeconomics

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