Distinguish between the following
Marco-Economics and Macro-Economics
ANSWER:
Basis of Difference
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Microeconomics
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Macroeconomics
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1. Definition
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It is a branch of economics that studies economic variables at an individual level like a household, firm and consumer.
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It is a branch of economics that studies economic variables of an economy as a whole.
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2. Deals with
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It deals with how consumers or producers make decisions depending on the budget given to them and other variables.
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It deals with how different economic sectors (household, industrial, government and foreign) make their decisions.
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3. Approach used
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It is based on partial equilibrium approach (i.e., equilibrium in one market)
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It is based on general equilibrium approach (i.e., equilibrium in all markets simultaneously)
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4. Variables involved
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The major variables involved are price, consumer’s demand, wages, rent, profit and firm’s revenue and cost.
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The major variables involved are aggregate demand, aggregate supply, inflation, unemployment and poverty.
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