Micro and macro economics notes. Micro and Macro Economies 2022-10-13

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Microeconomics and macroeconomics are two branches of economics that focus on different aspects of economic activity. Microeconomics is the study of individual economic units, such as households and firms, and how they make decisions about production, consumption, and the allocation of resources. Macroeconomics, on the other hand, is the study of the economy as a whole and looks at the overall level of production, employment, and prices in an economy.

Microeconomics starts by examining the behavior of individual economic agents, such as households and firms, and how they make decisions about production, consumption, and the allocation of resources. These decisions are influenced by a variety of factors, such as prices, income, and tastes. Microeconomics also looks at how these decisions interact with each other in markets and how they affect the allocation of resources in an economy.

One of the key concepts in microeconomics is supply and demand. The law of supply and demand states that the quantity of a good or service that a producer is willing to sell at a given price is directly related to the quantity that a consumer is willing to buy. This relationship is represented by a supply curve, which shows the quantity of a good or service that a producer is willing to sell at different prices, and a demand curve, which shows the quantity of a good or service that a consumer is willing to buy at different prices. The intersection of the supply and demand curves is known as the equilibrium price, which is the price at which the quantity demanded is equal to the quantity supplied.

Another important concept in microeconomics is opportunity cost. This is the cost of a particular action in terms of the next best alternative that was not chosen. For example, if a student decides to study economics instead of computer science, the opportunity cost is the potential income that the student could have earned by pursuing a career in computer science.

Macroeconomics, on the other hand, looks at the economy as a whole and examines how different economic variables, such as GDP, unemployment, and inflation, are related to each other. Macroeconomics also looks at how government policies, such as fiscal and monetary policy, can be used to stabilize the economy and achieve economic goals, such as full employment and price stability.

One of the key concepts in macroeconomics is the business cycle, which is the fluctuation of economic activity around its long-term trend. The business cycle is typically measured by the rate of economic growth, which is the percentage change in real GDP over a given period of time. The business cycle is divided into four phases: expansion, peak, contraction, and trough. During the expansion phase, economic activity is increasing and the economy is growing. During the peak phase, economic activity has reached its highest point and is beginning to decline. During the contraction phase, economic activity is decreasing and the economy is in recession. During the trough phase, economic activity has reached its lowest point and is beginning to recover.

Another important concept in macroeconomics is the Aggregate Demand-Aggregate Supply (AD-AS) model, which is a graphical representation of the relationship between the overall level of prices in the economy and the overall level of output. The AD curve shows the relationship between the overall level of prices in the economy and the overall level of expenditure, while the AS curve shows the relationship between the overall level of prices in the economy and the overall level of output. The intersection of the AD and AS curves is the equilibrium point, which is the level of output and prices at which the economy is in equilibrium.

In summary, microeconomics and macroeconomics are two branches of economics that study different aspects of economic activity. Microeconomics focuses on the behavior of individual economic units, such as households

[PDF Notes] Brief notes on Micro and Macro

micro and macro economics notes

Therefore, as discussed above, the following economic problems form the subject matter of Macro-Economics: i Theories of Income and Employment ii Theories of International Trade iii Problem related to national income iv Monetary and Fiscal theories In the words of Prof. Its coverage is quite wide and comprehensive. ADVERTISEMENTS: Economic problems can be analysed or studied in two ways— i at individual level, and ii at aggregate level. All microeconomic studies can analyze the better understanding of micro and macroeconomics variables. Economists implicitly assumed that either markets were in equilibrium—such that prices would adjust to equalize supply and demand—or that in the event of a transient shock, such as a financial crisis or a famine, markets would quickly return to equilibrium. Microeconomics focuses on overcoming issues concerning the allocation of resources and price discrimination. It solves the three central problems of an economy, i.

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Economics Notes on " MicroEconomics and MacroEconomics "

micro and macro economics notes

It is thus a study of a particular unit rather than all the units combined. Microeconomics is the study of specific segments and markets of an economy. Similarly, a decision to cut income tax rates may result in households buying more cars. Microeconomics — is the study of the behavior and decisions of households and firms performance of individual markets. For the first time, Prof. Candidates those who are all preparing for the Examination can use this study material.

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What is microeconomics?

micro and macro economics notes

It helps business economist to make conditional predictions and business forecasts. The same cannot be said of macroeconomics—where there are, and have been, competing schools of thought about how to explain the behavior of economic aggregates. Microeconomic analysis offers insights into such disparate efforts as making business decisions or formulating public policies. In the same manner, we study the behavior pattern of a typical firm, or an industry, in response to alternative cost and demand conditions faced by it. Decisions makers in macroeconomics and microeconomics These decisions makers are sometimes referred to as economic agents. Micro Economics is dependent on Macro Economics: The demand for the product for a firm depends on the total employment, income, and demand of the entire country for the product. In this way, the study of various economic aggregates is called Macro-Economies.

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Micro And Macro Economics

micro and macro economics notes

It concerns such issues as the effects of minimum wages, taxes, price supports, or monopoly on individual markets and is filled with concepts that are recognizable in the real world. Macroeconomics studies the economic progress and steps taken by a nation. Much economic analysis is microeconomic in nature. Importance of Macroeconomics Macroeconomics has emerged as the most challenging branch of economics. It is clear from the following points: 1. The aggregation may extend to the entire economy, particularly when we are studying the issues of inflation, cyclical fluctuations in national income, balance of payments and do on. Such a study will help in the formulation of economic policies and programs.

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Difference Between Micro and Macro Economics with Examples

micro and macro economics notes

The field began with the observations of the earliest economists, such as Adam Smith, the Scottish philosopher popularly credited with being the father of economics—although scholars were making economic observations long before Smith authored The Wealth of Nationsin 1776. Limitations of Macroeconomics Some of the major limitations of macroeconomics are: i Macroeconomics ignores structural changes in an individual unit of the aggregate. It provides the basic and logical framework for formulating appropriate macroeconomic policies e. His approach was taken up by other leading economists and developed rapidly into what is now known as macroeconomics. The conclusions drawn on the basis of aggregate variables may be misleading.

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Brief notes on Micro and Macro

micro and macro economics notes

They studied business cycles—as economies regularly changed from a condition of rising output and employment to reduced or falling growth and rising unemployment, frequently punctuated by severe changes or economic crises. Microeconomics is defined as the study of behaviour of individual decision-making units, such as consumers, resource owners and firms. They have tried to develop microeconomic foundations for macroeconomic models on the grounds that valid economic analysis must begin with the behavior of the elements of microeconomic analysis: individual households and firms that seek to optimize their conditions. Higher demand levels, personal income, etc. It has applications in trade, industrial organization and market structure, labor economics, public finance, and welfare economics. This bit-by-bit approach makes the task of analysis simpler and easier.

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Write brief notes on Micro and Macro Economics

micro and macro economics notes

For the first time, Prof. It helps in efficient employment of resources by the entrepreneurs. Microeconomics helps in formulating economic policies which enhance productive efficiency and results in greater social welfare. The government is a major object of analysis in macroeconomics- for example, studying the role it plays in contributing to overall economic growth or fighting inflation. Microeconomics also focuses on issues arising due to price variation and income levels.

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Micro and Macro: The Economic Divide

micro and macro economics notes

Microeconomics focuses on the choices made by individual consumers as well as businesses concerning the fluctuating cost of goods and services in an economy. Little-picture microeconomicsis concerned with how supply and demand interact in individual markets for goods and services. Micro and Macro Economics Micro and Macro Economics Interdependence between Micro Economics and Macro Economics Though there is a sharp distinction between Micro Economics and Macro Economics still Micro and Macro Economics are the two sides of the same coin. It is used to explain gains from trade, disequilibrium in the balance of payment position and determination of international exchange rate. .

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[PDF Notes] Write brief notes on Micro and Macro Economics 2023

micro and macro economics notes

The method of studying at an individual level is known as Micro-Economics and that of studying at an aggregate or collective level is known as Macro-Economics. This means that changes in the microeconomy affect the changes in the macroeconomy and vice versa. Following the approach of physics, for the past quarter century or so, a number of economists have made sustained efforts to merge microeconomics and macroeconomics. Micro-Economics: The word Micro in economics has been taken from a Latin word Mikros which signifies small. Importance Helpful in determining the prices of a product along with the prices of factors of production land, labor, capital, entrepreneur etc.

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