The term economics is derived from the ancient Greek word oikonomia, which means “management of a household”. Adam Smith defined economics “as the study of the nature and causes of the generation of wealth of a nation”. The subject matter of economics has been divided into two parts: Microeconomics and Macroeconomics. These terms were first coined and used by Ragnar Frisch and have now been adopted by economists all over the world.UPSC aspirants need to know the basics of economics. Syllabus of UPSC GS paper 3 has economics in it. And students should be clear with the concepts of economics. It is also very essential for the students to keep a track of current affairs related to economics. To read more articles on Economics click here.
- Difference between Macro and Micro Economics
- Microeconomics occupies a vital place in economics and it has theoretical and practical importance.
- It is microeconomics that tells us how a free-market economy with its millions of consumers and producers works to decide about the allocation of productive resources among thousands of goods and services.
- Microeconomics analysis is also usefully applied to the various applied branches of economics such as Public Finance and International Economics
Macroeconomics analyses the behaviour of the whole economic system in totality or entirety, such as total employment, national product or income, the general price level in the economy. Therefore, macroeconomics is also known as “aggregative economics”.
MACROECONOMICS VS MICROECONOMICS
- Macroeconomics studies the functioning of the economy as a whole
- Microeconomics analyses the behaviour of individual components like industries, firms and households.
- Thus, microeconomics deals with the theory of the firm and the behaviour and problems of individuals and firms.
- It is concerned with pricing theory, demand concepts and theories of market structure.
- Macroeconomics is concerned with such economic variables as the aggregate output of an economy, the extent to which the resources are employed, the level and determination of national income, balance of payments, etc.
Economics is one of the most important part of UPSC syllabus. To read more articles on Economics click here