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    Microeconomics Vs Macroeconomics

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    sotaw
    Microeconomics studies individuals and business decisions, focusing on supply and demand to determine price levels. Macroeconomics takes a top-down approach to analyze the decisions of countries and governments and how they impact the overall economy. Though they appear different, microeconomics and macroeconomics are interdependent and complementary in understanding economic behavior.

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    Microeconomics Vs Macroeconomics

    Uploaded by

    sotaw
    161 views3 pages
    Microeconomics studies individuals and business decisions, focusing on supply and demand to determine price levels. Macroeconomics takes a top-down approach to analyze the decisions of countries and governments and how they impact the overall economy. Though they appear different, microeconomics and macroeconomics are interdependent and complementary in understanding economic behavior.

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    Microeconomics vs Macroeconomics

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    Microeconomics studies individuals and business decisions, focusing on supply and demand to determine price levels. Macroeconomics takes a top-down approach to analyze the decisions of countries and governments and how they impact the overall economy. Though they appear different, microeconomics and macroeconomics are interdependent and complementary in understanding economic behavior.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    161 views3 pages

    Microeconomics Vs Macroeconomics

    Uploaded by

    sotaw
    Microeconomics studies individuals and business decisions, focusing on supply and demand to determine price levels. Macroeconomics takes a top-down approach to analyze the decisions of countries and governments and how they impact the overall economy. Though they appear different, microeconomics and macroeconomics are interdependent and complementary in understanding economic behavior.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Microeconomics vs.

    Macroeconomics
    Economics is divided into two categories: microeconomics and macroeconomics.
    Microeconomics is the study of individuals and business decisions,
    while macroeconomics looks at the decisions of countries and governments.
    Though these two branches of economics appear different, they are actually
    interdependent and complement one another. Many overlapping issues exist
    between the two fields.
    KEY TAKEAWAYS
    Microeconomics studies individuals and business decisions,
    while macroeconomics analyzes the decisions made by countries and
    governments.
    Microeconomics focuses on supply and demand, and other forces that determine
    price levels, making it a bottom-up approach.
    Macroeconomics takes a top-down approach and looks at the economy as a
    whole, trying to determine its course and nature.
    Investors can use microeconomics in their investment decisions, while
    macroeconomics is an analytical tool mainly used to craft economic and fiscal
    policy.

    Microeconomics
    Microeconomics is the study of decisions made by people and businesses
    regarding the allocation of resources, and prices at which they trade goods and
    services. It considers taxes, regulations and government legislation.
    Microeconomics focuses on supply and demand and other forces that determine
    price levels in the economy. It takes a bottom-up approach to analyzing the
    economy. In other words, microeconomics tries to understand human choices,
    decisions and the allocation of resources.
    Having said that, microeconomics does not try to answer or explain what forces
    should take place in a market. Rather, it tries to explain what happens when there
    are changes in certain conditions.
    For example, microeconomics examines how a company could maximize its
    production and capacity so that it could lower prices and better compete. A lot of
    microeconomic information can be gleaned from company financial statements.

    Microeconomics involves several key principles, including (but not


    limited to):
    • Demand, Supply and Equilibrium: Prices are determined by the law of
    supply and demand. In a perfectly competitive market, suppliers offer the
    same price demanded by consumers. This creates economic equilibrium.
    • Production Theory: This principle is the study of how goods and services
    are created or manufactured.
    • Costs of Production: According to this theory, the price of goods or services
    is determined by the cost of the resources used during production.
    • Labor Economics: This principle looks at workers and employers, and tries
    to understand patterns of wages, employment and income.
    The rules in microeconomics flow from a set of compatible laws and theorems,
    rather than beginning with empirical study.

    Macroeconomics
    Macroeconomics, on the other hand, studies the behavior of a country and how
    its policies impact the economy as a whole. It analyzes entire industries and
    economies, rather than individuals or specific companies, which is why it's a top-
    down approach. It tries to answer questions such as, "What should the rate of
    inflation be?" or "What stimulates economic growth?"

    Macroeconomics examines economy-wide phenomena such as gross domestic


    product (GDP) and how it is affected by changes in unemployment, national
    income, rates of growth and price levels.
    Macroeconomics analyzes how an increase or decrease in net exports impacts a
    nation's capital account, or how gross domestic product (GDP) is impacted by
    the unemployment rate.
    Macroeconomics focuses on aggregates and econometric correlations, which is
    why governments and their agencies rely on macroeconomics to formulate
    economic and fiscal policy. Investors who buy interest-rate sensitive securities
    should keep a close eye on monetary and fiscal policy. Outside a few meaningful
    and measurable impacts, macroeconomics doesn't offer much for specific
    investments.

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