Question

Schiller, B. R. (2017). Essentials of economics (10th ed.).

ECO 120 : Critical Reflection

Differences between macroeconomics and microeconomics.

Explain which of the two that you feel has most significantly broadened your understanding of the American economy overall, and which you feel has the most relevance to your individual goals .

Refer to two or three of the theories, concepts, terms, or models we have studied that you can apply in your daily life. (As mom, student and beginning investor-stock market )

Answer 1

The main difference between microeconomics and macroeconomics is scale.

Microeconomics covers behaviour of individuals, and individual households in the usage of the amount of resources available.

While Macroeconomic studies the bigger scale like governments and its policies, fiscal rates, monetary policies,in short it studies the economy of a country.

For American economy , macroeconomics has played a huge role in brodening the horizon of understanding.

It is because of the study of the monetary and fiscal policies brought by federal reserve and govt, the dynamic policies, the reforms after great depression , all of these macroeconomics factors has helped in shaping up American economy collectively.

When it comes to my individual goals and targets, a mix of few factors of both ,microeconomics and macroeconomics work best as it acknowledge individual needs and importance.

For example, if I have started as an investor for a stock market , I am most likely to sort and choose stocks on the basis of fundamental and technical analysis.

From fundamental analysis, I would look at the company's balance sheet, income statement and cash flow to find out the history and present financial health of the company. I would also use technical analysis to figure out right time for entry and exit into that particular stock.

Along with these microeconomics factors, few macroeconomics factors like fiscal policy , economy condition , inflation rate , gdp , new changes brought up in the kind of company whose share I'm interested in , would not only be helpful for me to make right decision but also help me in preventing from falling into any investment trap.