Economics is the study of how economies work. It is a study of demand, production, supply, and consumption of goods and services. Economics is studied by dividing into two types, they are Micro Economics and Macro Economics. These two terms can be called as opposite to each other. This article presents you with difference between Micro and Macro economics.
MICRO ECONOMICS
The terms micro and macro are used by Ragnar Frisch. The word ‘Micro’ is derived from a greek word ‘Mikros’ which means small. It is a study of individual or small units of economics.
The things which are true in micro economics may not be true in macro economics. These are called macro economic paradoxes. For eg: saving by an individual is good from micro economics point of view but it results in the decline in total demand.
MACRO ECNOMICS
The word ‘Macro’ is derived from a greek word ‘Makros’ which means large. Macro economics is the study of aggregates like national income, total employment, aggregate demand, aggregate supply, etc.
The Things which are true in micro economics may not be true in macro economics. For eg: It is said that national income increased, it do not mean the income of all the people in the country increased, the incomes of some people may increase and others decrease.
COMPARISON TABLE
Let us see some of the differences between Micro Economics and Macro Economics.
| MICRO ECONOMICS | MACRO ECONOMICS |
|---|---|
| Micro economics is a study of individual or small units. like particular firm, industry, price of a commodity, etc. | Macro economics is a study of aggregates like national income, total employment, aggregate demand, aggregate supply, etc. |
| Price Determination | |
| In Micro economics the price of the commodity is determined with the help of demand and supply. | In Macro economics the level of income also plays an important role along with demand and supply in price determination. |
| Study Of | |
| In Micro economics we study some aggregate concepts, but the aggregate in micro economics is different from macro economics. for example, An industry is a group of firms. | In Macro economics we study the aggregate relating to the economy as a whole. for example National Income, Aggregate demand, Aggregate supply, etc. |
| Time Consideration | |
| In micro economics importance is not given for time element in determining the price. | In Macro economics importance is given to the time element in price determination. |
| Also Called as | |
| Micro economics is also known as "Price Theory", because of giving importance for price determinantion of various commodities and factors. | Macro economics is called " General Theory" or "Income and Employment Theory" as it gives importance for the determinantion of national income and employment. |
