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What is Macroeconomics?

Macroeconomics

Macroeconomics

What is Macroeconomics? Macroeconomics is the study of economics on a large scale. The Economist’s Dictionary of Economics defines Macroeconomics as “The study of whole economic systems aggregating over the functioning of individual economic units. It is primarily concerned with variables which follow systematic and predictable paths of behavior and can be analyzed independently of the decisions of the many agents who determine their level. More specifically, it is a study of national economies and the determination of national income.”

Macroeconomics examines the economy as a whole. Things to think about when it comes to Macroeconomics are what causes the economy to grow over time, and what causes changes in the economy? These are questions that affect the economy as a whole. Macroeconomics can be best understood in contrast to microeconomics which considers the decisions made at an individual or firm level. Macroeconomics considers the larger picture. You must understand microeconomics to understand macroeconomics. Once we understand how one person, can affect the economy, we will then understand how it affect the larger scale of things. Read the rest of this entry

What is Microeconomics?

Microeconomics

Microeconomics

What is Microeconomics? Simply put, Microeconomics is the study of economics on a small scale. Economist’s Dictionary of Economics defines Microeconomics a bit more detailed, “The study of economics at the level of individual consumers, groups of consumers, or firms… The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit.”

Basically, microeconomics deals with economics decisions made on a micro level. Microeconomic decisions come from both firms and individuals; these firms and individuals are motivated by cost and how it benefits the economy. The cost that is concerned about in microeconomics is that of financial costs (average fixed costs and total variable costs), and opportunity costs. Read the rest of this entry