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Macroeconomics Fundamental Theory
Macroeconomics Fundamental Theory
Macroeconomics
Macroeconomics vs Microeconomics
Microeconomics deals with individuals whereas macroeconomics
deals with the economy as a whole entity consisting of collective
individual units.
Macroeconomics uses aggregate demand and aggregate supply to
explain it’s concepts whereas microeconomics employs demand and
supply.
Macroeconomics focuses on the determination of income and
employment in the economy, on the other hand, microeconomics
aims at the determination of the price of a good or service and factors
of production.
In macroeconomics, the degree of aggregation is highest because
while dealing with the general aspects of the economy, factors have
to be aggregated completely. On the other side, the degree of
aggregation in microeconomics is limited.
Macroeconomics is known as income theory. Microeconomics is also
termed as price theory.
It can be easily observed that micro and macroeconomics differ on the
application of economic theory to two different scales. Despite all these
differences, both of these are not mutually exclusive of each other.
Macroeconomics is the aggregation of economic behaviour by
individual units. Microeconomic aspects can change with changes in
macroeconomic aspects and vice versa.