What are Macro and Microeconomics? What is its Differences

We all are familiar with the name -- Micro and Macro economics -- but do we really know the differences between the duo and what the both deal in. Let's have a clear understanding of the subject in this article.

As mentioned above, the economics is divided into two parts. The economics which studies individuals and business decisions comes under Microeconomics while Macroeconomics deals with the decisions of countries and governments. It focuses on the entire economy of a country.

Both of them are interdependent as many issues exist between them.

By now you must have learned the basic differences between the Micro and Macro economics. Now, let's penetrate into the topic more and understand the difference between the same to enlighten ourselves more.

Microeconomics: As mentioned above, the microeconomics is the study of individual and businesses. But apart from these, it also looks into prices at which people trade goods and services. It also keeps a tap on taxes, regulations and government legislation.

It also focuses demand and supply including other forces which determined prices in the economy. In simple terms it tries to evaluate choices of individual and his decisions. Looking at the changes which occur in certain condition, the microeconomics tries to indicate that what will happen in near future through various theorem and formulas.

Demand, Supply & Equilibrium, Production Theory, Costs of Production and Labor Economics are some of the key principles of microeconomics.

Macroeconomics: On the other side, the macroeconomics focuses on policies, inflation, employment of a country and its impact on the economy as a whole. It studies country based industries and different polices affecting them apart from keeping an eye on inflation and recession. It also analyzes high and lows in exports sector and its impact on the overall economy.

The government and its agencies depend on macroeconomics to formulate any economic and fiscal policy.

Economists also suggest that investors who are willing to buy interest-rate sensitive securities should keep a close eye on monetary and fiscal policy. Like microeconomics, the macroeconomics doesn't focus on individual or particular industries.

Also read: Law of Diminishing Marginal Utility And Its Types

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