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  Microeconomics Versus Macroeconomics

Microeconomics Versus Macroeconomics:

By itself macroeconomics is merely half of economics. For more than half a century economics has been classified into two groups: macroeconomics and microeconomics.

Macroeconomists inspect the economy in the large, focusing on reaction from one component of economy to another, and studying the whole level of production and employment.

Microeconomists study the markets for solo commodities, inspecting the activities of individual households and businesses. They concentrate on how competitive markets assign resources to make producer and consumer surplus, and how markets can go wrong.

These two groups of economists diverge in their vision of how markets work. Micro economists suppose that imbalances amid demand and supply are resolved by changes in prices. Increment in prices bring forth extra supply, and drops in prices bring forth extra demand, until demand and supply are again in balance. Macroeconomists think the possibility that imbalances between demand and supply can be resolved by modifying quantities rather than prices. That’s, businesses can be slow to alter the prices they charge, preferring rather to increase or contract production till supply balances demand.

In each generation, economists try to put together microeconomics and macroeconomics by providing "microfoundations." But no one person believes that the link between microeconomics and macroeconomics has however been soundly built. Economists are splited between those, who believe that the failure to successfully integrate the two branches is an error which urgently needs to be corrected, and those who believe that it is a regrettable but minor annoyance.

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