Difference Between Micro and Macro Economics (11 Points) | Important Article
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Difference Between Micro and Macro Economics
Economics refers to the branch of knowledge concerned with production, consumption and transfer of wealth. Economics can be further classified into two parts: microeconomics and macroeconomics.
Meaning of Micro Economics
Micro means a small part of a thing. Micro Economics thus deals with a small part of the national economy. It studies the economic actions and behaviour of individual units such as an individual consumer, individual producer or a firm, the price of a particular commodity or a factor etc.
Meaning of Macro Economics
Macro Economics is the branch of economics that analyses the entire economy. It deals with the total employment, national income, national output, total investment, total consumption, total savings, general price level interest rates, inflation, trade cycles, business fluctuations etc. Thus, macro economics is the study of aggregates.
- Difference Between Micro and Macro Economics
- Difference Between Owned Capital and Borrowed Capital
- Difference Between Debenture and Share
- Difference Between Preference Shares and Equity Shares
Difference Between Micro and Macro Economics
| Sr. No | Micro Economics | Macro Economics |
| 1 | Micro Economics studies the behaviour of an individual unit of an economy | Macro Economics studies the behaviour of aggregates of the economy as a whole |
| 2 | It includes individual price, individual demand, individual income, etc. | It includes general prices, aggregate demand, National income, etc. |
| 3 | Price determination and allocation of resources are the major problem studied under microeconomics | Determination of income and unemployment are the major problem studied under macroeconomics. |
| 4 | Two major tools i.e. demand and supply of a particular commodity is used in microeconomics | Two major tools i.e. aggregate demand (AD) and aggregate supply (AS) of a particular a commodity is used in macroeconomics |
| 5 | Microeconomics solves the central problem of what to produce, how to produce and for whom to produce. | Macroeconomics solves the central problem of full employment of resources in the economy. |
| 6 | It is concerned with the equilibrium of a consumer, a producer, and an industry. | It is concerned with the equilibrium of level of income and employment in an economy. |
| 7 | Microeconomics uses bottom-top approach for analyzing the economy | Macroeconomics uses top-bottom approach for analyzing the economy. |
| 8 | It assumes that all macroeconomic variables like aggregate demand, national income and price are constant. | It assumes that all microeconomic variables like individual demand, individual income, etc. are constant. |
| 9 | It is also known as price theory. | It is also known as income theory or employment theory. |
| 10 | It believes in Laissez-faire economy. | It believes in command economy. |
| 11 | It is simple to study microeconomics. | It is complex process to understand macroeconomic due to inclusion of large numbers. |
