Question

Whats the difference between macro and micro economics?

Answer 1

• We have two main branches of economics namely macroeconomics and microeconomics. They differ as follows:

Microeconomics :

• Microeconomics is a branch of economics that deals with decisions made by the individual units like the households, firms in allocating scarce resources. It is a part of economics that shows how these firms and households interact to take up important decisions in the Economy.
• It is also known as a price theory.
• For example :- A household sector deciding on how to spend their income Or a firm deciding on how to expand its business.

Macroeconomics :

• Macroeconomics is a branch of economics that deals with decisions made on behalf of the whole Economy by examining various factors like the Inflation level, growth rate, Interest rates, national income, rates of Employment etc.
• It is also known as an income theory.
• For example :- How much should the money supply increase in the Economy in order to create a high Employment rate is a macroeconomic problem.