Micro and Macroeconomics

Micro economics :-

    The term micro economics is derived from Greek word  ‘ mikros ’  meaning small.

    Microeconomics studies the economic actions and  behaviour of individual units and small groups of individual units .Thus micro economics deals with the  analysis of small individual units of the economy such as individual consumers ,individual firms and small aggregates or group of individual units such as various industries and market .In other words ,in micro economics we make a microscopic study of the economy .

     Micro economics may be defined as that branch of economic analysis which studies the economic behavior of the individual units, may be a person ,a particular  household or a particular firm .It is a study of one particular unit rather than all units combined together .

Macro economics

    The term macroeconomics is derived from the Greek word ‘ Makros’ meaning ‘Large’ .Macroeconomics may be defined as that branch of the economic analysis which studies the behavior of not one  particular unit but of all the  units combined together .

 Macroeconomics deals with the great averages  and aggregates of the system rather than with particular units in it .

Relationship between microeconomics and macroeconomics .

     Though microeconomics and macroeconomics deal with different subjects there is great interdependence between them  . In the explanation of many economic phenomena both microeconomic and macroeconomic tools and concepts have  to be applied .About interdependence  between micro and macroeconomics ,Prof. Ackleys remarks are worth quoting , He says ,” The relationship between macroeconomics and theory of  individual behavior is a two way street . On the other hand , microeconomics  theory  should provide  the building blocks for our aggregate theories .But macroeconomic theories may also contribute to microeconomics understanding .I f we discover ,for  example ,empirically stable macroeconomic generalizations which appear pessistent  with microeconomic theories or which relate to aspect of behavior which microeconomics has neglected, macroeconomic may permit us to improve our understanding of individual behavior.