It focuses on broad issues such as growth of production, the number of unemployed people, the inflationary increase in prices, government deficits, and levels of exports and imports.
MICRO VS MACRO ECONOMICS HOW TO
Next Section Freakonomics Criticism Previous Section Chapter 6 and Epilogue Summary and Analysis Buy Study Guide How To Cite in MLA Format Gundersen, Kathryn. Macroeconomics looks at the economy as a whole.
MICRO VS MACRO ECONOMICS PROFESSIONAL
One cannot exist without the other, and knowledge of both is necessary for any professional in economics. Where microeconomics takes a bottom-up approach to the field, macroeconomics instead takes a top-down approach.īoth fields, however, are hugely interdependent.
Macroeconomics looks at national economic phenomena like Gross Domestic Product (GDP), as well as changes in the wide economy like national unemployment or trade and exports. Rather than individual firms and consumers, macroeconomics studies entire economies and economic systems. Macroeconomics, on the other hand, works on a larger scale. Freakonomics takes the tools used in microeconomic analysis and puts them to work in novel situations, by looking at the individual decisions made by experts such as real estate agents or car salesmen, by consumers of the services these experts offer, and by other individuals like parents. The prefix micro is equivalent to the word 'small' where as the prefix macro is synonymous with the word. In economics, microeconomics focuses on individual decision-making and market behavior, whereas macroeconomics examines the overall economy and factors like inflation and unemployment. This video tutorial explains the key differences between microeconomics and macroeconomics. Market components versus a larger economy: Microeconomics typically examines a businesss presence in a market to make financial decisions and designate resources. Micro refers to small-scale factors or elements, while macro refers to large-scale systems or structures. Microeconomics focuses on individual producers and consumers and the laws of supply and demand that dictate the prices that producers set and that consumers are willing to pay for.Īs it centers around individual behavior, Freakonomics is largely concerned with microeconomics. In contrast, macroeconomics monitors the state of the global economy and how each country manages its finances. It studies the motivations behind these choices-called incentives-as well as the effect that these choices have. Microeconomics zooms in on the role that the choices made by these individual entities play in the larger economy. Individual could mean an individual person, or an individual company or firm.
Microeconomics is the study of individual decision-making. Microeconomics works on the principle that markets soon create equilibrium. In many ways, these fields are two sides of the same coin: they have differences, but both intertwined contribute to our understanding of economics as a whole. The main differences between micro and macro economics Small segment of economy vs whole aggregate economy. The study of economics can be broken up into two distinct branches: microeconomics and macroeconomics.
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