Difference between Micro and Macro Economics

 

Difference between Micro and Macro Economics

Basis for Comparison	Microeconomics	Macroeconomics
Meaning	Microeconomics deals with the individual units of an economy	Macroeconomics deals with the aggregates of the economic system
Deals with	It deals with individual income, individual output,  Individual prices	It deals with aggregates, national income, employment, and general price level, etc.
Major issues	Price determination and allocation of resources are the major issues	National income, output, and employment are the major issues
Method of study	Partial equilibrium analysis  It studies the equilibrium of a consumer, a firm, an industry, or a market.  Slicing method	General equilibrium analysis  It deals with the equilibrium position of the economy as a whole.  Lumping method
Economic variables	Uses micro variables-consumer’s demand, producer’s supply	Uses macro variables- aggregate demand, aggregate supply
Approach	Microeconomics uses a bottom-top approach for analyzing the economy.  The bottom-top approach begins at the specific and moves to the general	Macroeconomics uses a top-bottom approach for analyzing the economy.   The top-bottom approach goes from the general to the specific
Gives the solution	Microeconomics solves the central problem of what to produce, how to produce, and for whom to produce	Macroeconomics solves the central problem of full utilization of resources in the economy
Assumption	All macroeconomic variables like aggregate demand, national income, and general price are constant	All microeconomic variables like individual demand, individual income are constant
Known as	It is also known as price theory	It is also known as income and employment theory
Types of economy	It believes in a Laissez-faire economy	It believes in a command economy.

    

Neither of these two approaches (micro & macro analysis) can alone adequately help us in analyzing the working of the economics system. According to Samuelson, “There is really no opposition between Micro and Macro Economics. Both are absolutely vital and you are only half-educated if you understand the one while being ignored or the other”. It makes sense to integrate these two approaches for analyzing the economic problem and prescribing policy measures to tackle them. 

 Dr. Swati Gupta

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