Economics

Why is there micro and macroeconomics? The reason why there is micro and macroeconomics is that they are two different types of economics.

Microeconomics is the part of economics concerned with studying decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on [|__supply__] and [|__demand__] and other forces that determine the price levels seen in the economy. For example, microeconomics would look at how a specific company could maximize it's production and capacity so it could lower prices and better compete in its industry. []  The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets.

Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area. • Micro is the study of the components of the economy. – MICRO: The statistics of the offense and the defense.

 Microeconomics is the study of the local effects of firms, families and small-scale groups of businesses, which can be thought of as if they were independent of the rest. This may be useful for some aspects of how their separate finances are working, but it does nothing to understand how to integrate them into the full-scale system of the country. [|http://answers.yahoo.com/question/index;_ylc=X3oDMTQ4OW8zbmpjBF9TAzIwMjMxNTI3MDIEYXBwaWQDamV2RzNUN0lrWTBXVlltd2t3Y0F6QzVSWmpMdlpQMC0EY2xpZW50A2Jvc3MEc2VydmljZQNCT1NTBHNsawN0aXRsZQRzcmNwdmlkA2syMFBEa2dlQXUyZ2VsaXRHVkNoYTYyZjBHMktJa3RfQjE0QUNmTzE-?qid=20100108014354AAA4oCi]


 * Micro Economics:- **

It deals with an individual's economic behavior. It deals with the pricing of a particular commodity in an industry. It deals with the income of a particular set of people. Study of micro economics is important for resource utilization, public finance, and for taking business decisions. These concepts have more theoretical value and are used in analyses of businesses []

[|__Macroeconomics__], on the other hand, is the field of economics that studies the behavior of the economy as whole and not just on specific companies, but entire industries and economies. This looks at economy-wide phenomena, such as [|__Gross National Product__] (GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels. For example, macroeconomics would look at how an increase/decrease in net exports would affect a nation's [|__capital account__] or how GDP would be affected by [|__unemployment rate__]. []

The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other,  • Macro is the study of the aggregated economy. Imagine a football team: – MACRO: It might be having a winning or loosing season.

Macroeconomics is dealing with the "big picture" of the whole economy. So in practice an observer of this needs to stand far away and so avoid the problem of not seeing "the wood for the trees". This problem is often so acute that would-be macro-economists get confused about what they should be studying. [|http://answers.yahoo.com/question/index;_ylc=X3oDMTQ4OW8zbmpjBF9TAzIwMjMxNTI3MDIEYXBwaWQDamV2RzNUN0lrWTBXVlltd2t3Y0F6QzVSWmpMdlpQMC0EY2xpZW50A2Jvc3MEc2VydmljZQNCT1NTBHNsawN0aXRsZQRzcmNwdmlkA2syMFBEa2dlQXUyZ2VsaXRHVkNoYTYyZjBHMktJa3RfQjE0QUNmTzE-?qid=20100108014354AAA4oCi]

<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;"> Macroeconomics, on the other hand, looks at the big picture (hence "macro"). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world. For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not necessarily a bad thing. Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the micro and macro levels. http://www.investopedia.com/terms/m/microeconomics.asp


 * <span style="color: #000090; font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Macro Economics:- **<span style="color: #000090; font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">

It deals with aggregate economic behavior of the people in general. It deals with the general price level in the economy, National income accounting, etc. Study of macro economics is important for formulation of economic policy of the whole nation. The concept of macro economics are interdependent on one another. The concepts were popularized by the famous Lord J.M. Keynes. These concepts have more practical value. []

<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;">While these two studies of economics appear to be different, they are actually interdependent and complement one another since there are many overlapping issues between the two fields. For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product's price charged to the public.

<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;">The bottom line is that microeconomics takes a [|__bottoms-up__]<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;"> approach to analyzing the economy while macroeconomics takes a [|__top-down__]<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;"> approach. Regardless, both micro- and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies operate and earn [|__revenues__]<span style="font-family: Arial; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 13.0pt;"> and thus, how an entire economy is managed and sustained. []