Macroeconomics
Definition of Macroeconomics :
The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.
The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.
In general, economics is the study of how agents (people, firms, nations) use scarce resources to satisfy unlimited wants. Macroeconomics is the branch of economics that concerns itself with market systems that operate on a large scale.
Some of the key questions addressed by macroeconomics include: What causes unemployment? What causes inflation? What creates or stimulates economic growth? Macroeconomics attempts to measure how well an economy is performing, understand how it works, and how performance can improve.
While the term "macroeconomics" is not all that old (going back to Ragnar Frisch in 1933) many of the core concepts in macroeconomics have been the focus of study for much longer. Topics like unemployment, prices, growth and trade have concerned economists almost from the very beginning of the discipline, though their study has become much more focused and specialized through the 1990s and 2000s.
Likewise, it is difficult to name any sort of founder of macroeconomic studies. John Maynard Keynes is often credited with the first theories of economics that described or modeled the behavior of the economy, elements of earlier work from the likes of Adam Smith and John Stuart Mill clearly addressed issues that would now be recognized as the domain of macroeconomics.
Some of the key questions addressed by macroeconomics include: What causes unemployment? What causes inflation? What creates or stimulates economic growth? Macroeconomics attempts to measure how well an economy is performing, understand how it works, and how performance can improve.
While the term "macroeconomics" is not all that old (going back to Ragnar Frisch in 1933) many of the core concepts in macroeconomics have been the focus of study for much longer. Topics like unemployment, prices, growth and trade have concerned economists almost from the very beginning of the discipline, though their study has become much more focused and specialized through the 1990s and 2000s.
Likewise, it is difficult to name any sort of founder of macroeconomic studies. John Maynard Keynes is often credited with the first theories of economics that described or modeled the behavior of the economy, elements of earlier work from the likes of Adam Smith and John Stuart Mill clearly addressed issues that would now be recognized as the domain of macroeconomics.
Microeconomics
The study of microeconomics reveals how both consumers and businesses make financial decisions. Although a variety of impulses and imperatives drive these decisions, a principal determinant for the consumer is price, and for business the supply-demand factor as it relates to pricing and output.
There are also other elements that influence financial decision making, some simple, some complex, all of which were described in the preceding sections, and all of which ripple through the economy at large.
The great lesson of microeconomics is how individual decision making can be described in certain mathematical formulae, may be predicted with reasonable accuracy, and how each of these individual choices, both consumer and business, when multiplied many million-fold create the economic conditions in which we live. microeconomics studies a limited, smaller area of economics, including the actions of individual consumers and businesses, and the process by which both make their economic decisions – buying, selling, the prices businesses charge for their goods and services and how much of these goods and services they produce and or offer.
Microeconomic study reveals how start-up businesses have determined the competitively successful or unsuccessful pricing of their goods and services based on consumer needs and choices, market competition and other financial and economic formulas.
Microeconomics also studies supply-demand ratios and its effect on consumer spending and business decision-making.
At the heart of consumer purchasing is the concept of utility, a classic economic idea. Utility is the term applied to a consumer's satisfaction after the purchase of some product or service. Because a consumer's feeling of satisfaction may be impossible to precisely quantify in actual numbers, the concept may seem impractical. But a reasonably close approximation is useful to businesses, and may also be useful to the individual consumer who can probably measure that feeling of satisfaction with a "gut" reaction.
These concepts and others are discussed under the "Economic Concepts" tab on the menu above or by clicking on the button below.
There are also other elements that influence financial decision making, some simple, some complex, all of which were described in the preceding sections, and all of which ripple through the economy at large.
The great lesson of microeconomics is how individual decision making can be described in certain mathematical formulae, may be predicted with reasonable accuracy, and how each of these individual choices, both consumer and business, when multiplied many million-fold create the economic conditions in which we live. microeconomics studies a limited, smaller area of economics, including the actions of individual consumers and businesses, and the process by which both make their economic decisions – buying, selling, the prices businesses charge for their goods and services and how much of these goods and services they produce and or offer.
Microeconomic study reveals how start-up businesses have determined the competitively successful or unsuccessful pricing of their goods and services based on consumer needs and choices, market competition and other financial and economic formulas.
Microeconomics also studies supply-demand ratios and its effect on consumer spending and business decision-making.
At the heart of consumer purchasing is the concept of utility, a classic economic idea. Utility is the term applied to a consumer's satisfaction after the purchase of some product or service. Because a consumer's feeling of satisfaction may be impossible to precisely quantify in actual numbers, the concept may seem impractical. But a reasonably close approximation is useful to businesses, and may also be useful to the individual consumer who can probably measure that feeling of satisfaction with a "gut" reaction.
These concepts and others are discussed under the "Economic Concepts" tab on the menu above or by clicking on the button below.