Macro Micro Economics

One of the first units studied in economics is the differences in macro micro economics. While at times the differences may not seem that apparent, macro micro economics both have key components to differentiate them, leading to their own specialized fields of study. The major points of macro micro economics will be discussed.

 

Typically the first 101 level course taught and studied in macro micro economics is microeconomics. As defined, microeconomics is the study of individual firms, units and consumers. Whether it is consumer or producer behaviors, or the staple of microeconomics, supply and demand, if it deals with the individual, it is microeconomics.

 

When studying macro micro economics, Macroeconomics on the other hand is the aggregate of the individual decision makers, or the study of the performance, behavior, structure and decisions of the economy as whole, in either a regional, national or global level. Commonly looked at variables include GDP, interest rates, price indices, unemployment, trade and inflation. It is also often broken up into 3 time periods, the short run, medium run and long run, with each having different impacts upon changes in variables.

 

The development of macroeconomics can not be pinned to a single point in history, but Ragnar Frisch originally coined the term macrosystem, of which macroeconomics was derived. Knut Wicksell has also been credited with the founding of modern day macro economics. Its early focus was a lot more defined and less broad than it is today, covering business cycles and monetary policy specifically.

 

In the field of macro micro economics,  macroeconomics is made up of two main branches. The Keynesian branch follows heavily upon John Maynard Keynes contributions to economics. The primary concept behind this branch is demand management. By analyzing aggregate demand variables such as unemployment and the actions of business cycles can be explained.  While gaining support from many well known macro micro economists such as Robert Solow, the branch has been updated to keep up with changing times and revisions to the other branch, the neoclassical.

 

The macro micro economics neoclassical following held more true to the basic followings of micro economics. By building on the rationale model that all decisions are logical, economists such as Milton Freidman argued against monetary policy, as demand management simply crowded out the private sector. The Keynesian view was challenged by having to follow micro economic models, but have been updated since to accommodate generally accepted assumptions presented in the neoclassical model.

 

The key to differentiating the two fields of study is range of impact. If the decision is localized to an individual of any kind, it is microeconomics, but if it is an aggregate of individuals, it is macroeconomics. Macro Micro Economics is a key component in understanding economics in while. Macro Micro economics each has its own branches of study and specializations. Through studying macro micro economics business around the globe will improve and the world we live in will be better understood.