Distinguish between the following

Marco-Economics and Macro-Economics

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Solution

Basis of Difference Microeconomics Macroeconomics

1. Definition It is a branch of economics that studies economic variables at an individual level like a household, firm and consumer. It is a branch of economics that studies economic variables of an economy as a whole.

2. Deals with It deals with how consumers or producers make decisions depending on the budget given to them and other variables. It deals with how different economic sectors (household, industrial, government and foreign) make their decisions.

3. Approach used It is based on partial equilibrium approach (i.e., equilibrium in one market) It is based on general equilibrium approach (i.e., equilibrium in all markets simultaneously)

4. Variables involved The major variables involved are price, consumer’s demand, wages, rent, profit and firm’s revenue and cost. The major variables involved are aggregate demand, aggregate supply, inflation, unemployment and poverty.

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