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Micro and Macro Economic /positive and Normative Economics

Microeconomics studies individual economic decision-making and small economic units, focusing on determining prices and factors of production. It assumes macroeconomic aggregates are constant. Macroeconomics studies aggregate economic indicators and how they interact at a national level, focusing on outcomes like income, employment, and price levels. It examines issues like unemployment, inflation, and economic growth from a broad perspective and assumes micro-level variables are constant.

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kunja b mohanty
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769 views2 pages

Micro and Macro Economic /positive and Normative Economics

Microeconomics studies individual economic decision-making and small economic units, focusing on determining prices and factors of production. It assumes macroeconomic aggregates are constant. Macroeconomics studies aggregate economic indicators and how they interact at a national level, focusing on outcomes like income, employment, and price levels. It examines issues like unemployment, inflation, and economic growth from a broad perspective and assumes micro-level variables are constant.

Uploaded by

kunja b mohanty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MICROECONOMICS MACROECONOMICS

 ‘MICRO’- Greek word- ‘MIKROS’- Which means SMALL.  ‘MACRO’- Greek Word –’MAKROS’- Which means Large.
----It is the study of economic actions of Individuals. -------It is the study of economics system as a whole.
 It studies individual economics units like a particular  It studies aggregate economic units like aggregate
household’s income ,a firm’s output ,an industry’s income, demand ,aggregate supply ,national income, total output ,
an individual’s demand and supply etc. employment and aggregate price level.

 It aims to determine price of commodity and factors of  It aims to determine income and employment level of the
production. country.
 Micro economics assumes all the macro economics variables  Macro economics assumes the individual decision or micro
( total output, general price level ,unemployment etc ) to be economics variables constant.
constant.

 It deals with a specific industry or a sector or person  It includes understanding how unemployment ,price levels ,
economic activities. growth rate affects the economy wide aspects .
 For example-microeconomics would study how a company  For example – macroeconomics would look at how an
could lower its prices to increase its product demand in the increase /decrease in net imports would affect a nation’s
market. capital account.

 Micro economics analysis is simple .  Macroeconomics is complex due to the study of large
groups.
 It is also known as “Price Theory’’  It is also know as “Income and employment theory”.
BASIS OF DIFFERENCE POSITIVE ECONOMICS NORMATIVE ECONOMICS

1.MEANING It is concerned with “what is’’ or how the It is concerned with “What ought to be” or how
economic problems can be solved . the economic problems should be solved.

2.VERIFICATION We can verify it with actual data. It is impossible verify with actual data.

3.AIM It aims at making real description of an economic It aims at determining the ideals.
activity.

4.SUGGESTIVENESS It is always based on the facts and so it cannot be It is based on opinion of an individual and so it is
suggestive. suggestive in nature.

5.VALUE JUDGEMENT It does not give any value judgements. It does give value judgements.

6.EXAMPLE 1.Price level in Indian economy is constantly 1.India must take steps to curb the rising price
rising. level.
2.There is a wide inequality of income in India. 2.Inequality of Income must be reduced.

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