Explain, Difference between microeconomics and macroeconomics

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 Difference between microeconomics and macroeconomics

Micro and Macro economics

The subject Matter of economics habeen studied under two broad branches:-
1.Microeconomics 2.Macroeconomics
These two concept have become of general use in economics.Let us discuss these concepts in detail.

Microeconomics:. Adam Smith is considered the founder of the field of microeconomics.The word ‘micro’ has been derived from Greek word ‘mikros’ which means ‘small’.Microeconomics deals with analysis of behaviour and economic actions of small and individual units of economy like a particular consumer,a firm or a small group of individual units . Microeconomics is that part of economic theory, which studies the behaviour of individual units of an economy.For example, Individual income, individual output,price of a commodity etc.Its main tools are demand and supply.

 

Macroeconomics:-The word ‘macro’ has been derived from the Greek word ‘Makros’ which means ‘large’. So macroeconomics deals with overall performance of the economy.It is concerned with the study of problems of the economy like inflation , unemployment, poverty etc.

Macroeconomics is that part of economic theory which studies the behaviour of aggregates of the economy as a whole .For example National income, aggregate output etc.Its main tools are Aggregate Demand and Aggregate Supply.

Micro vs Macro 
*In Microeconomics, the letter ‘I’ stand for ‘individuals’ .It studies the economic behaviour of individuals.
*In Macroeconomics,the letter ‘A’ stand for ‘Aggregate’.It studies the economy as a whole .

Difference between microeconomics and macroeconomics

 

Microeconomics :-

Meaning –Microeconomics is that part of economic theory which studies the behaviour of an economy.
Tools – Demand and Supply
Basic Objective-
Its purpose is to determine the value of a commodity or factors of production.
Degree of Aggregation – This involves a limited amount of aggregation. For example, market demand is obtained by aggregating the individual demands of all buyers in a particular market.
Basic Assumption-It assumes all the macro variables to be constant,it assumes that national income, consumption, saving etc are constant .
Other Name –It is also known as ‘Price Theory’.
Example –Individual income, individual output .

Macroeconomics :-

Meaning –Macroeconomics is that part of economic theory which studies the behaviour of aggregates of the economy as a whole .
Tools –Aggregate Demand and aggregate Supply .
Basic Objective –aim to determine income and employment level of the economy .
Degree of Aggregation –It involves the highest degree of aggregation.For example, aggregate demand is derived for the entire economy .
Basic Assumption –It assumes that all the micro variables like decisions of households and firms, prices of individual products etc are constant.
Other Name – It is also known as ‘Income and Employment theory .
Examples- National income , National output.