Though the two studies are presented to affect differently, the point is that both are interdependent. This is then translated into a demand supply chart that shows the viability for entities. The micro economics looks at individuals and how taxes, interet rates and other government regulations affect the individuals purchasing habits. Macro economics relies heavily on GDP, the unemployment rates, national income and rate of growth. The concepts too that govern the two are different for both. Where macro takes a holistic approach to the economy taking into consideration the policies o the other countries as well, the micro economics looks at individuals in the economy and their buying behavior. This is how he demand and supply adjust in the economy.ĭifference between Macro and Micro Economics When the demand decreases and the supply for the goods increase then the price decreases so that the quantities are sold out. When the demand for a ‘basket of goods” or services increases, or the supply of such decreases, the price accordingly increases. By individuals, the focus is more on households and their demand and supply patterns governed immensely by prevailing interest rates, the inflationary conditions of the economy and therefore their purchasing power. Microeconomics is that branch of economics that studies the nature of individuals. Macro economic policies are used by corporations and the government at large to predict an outlook for their businesses or to find out feasibility for the survival of any new business.
The output of a country, inflation, savings, unemployment, international economic policies and policies on export and import tend to govern the macroeconomics as macro refers to a larger picture and therefore takes into consideration the whole economy.
Macro economics is that branch of economics that deals with the economy as a whole and the decisions revolve around indicators such as the GDP, unemployment and consumer prices indices. Because trading between countries is an integral part of economics, the economic policies associated with the countries tend to transcend boundaries along with the products and services supplied. This scenario was governed by the macro and micro economics where the central banks had to take huge leaps to stabilize their respective economies. In inflationary conditions, it is the middle and the lower class that is the most affected as the upper class still has purchasing power to survive the conditions. The world economy stumbled especially the middle and the lower class that is the maximum population of the entire world. The recent financial crisis in the world created huge losses for companies as the purchasing power of the individuals declined and inflation heightened.
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