Macroeconomics & Microeconomics - Public Health Notes

Table of Contents

What is Macroeconomics?

Macroeconomics is primarily concerned with the study of aggregates or study of economy as a whole
Macroeconomics tackles broad-based issues that affect the entire country.
Macroeconomics covers the overall behavior, structure, performance, and decision-making of the economy.
In macroeconomics, we examine “A,” or aggregate. This means that everything is examined from a comprehensive standpoint in macroeconomics.
‘Macro’ is short form for big. In macroeconomics, we learn about total supply and total demand.
Macroeconomics deal with static analysis.

Macroeconomics follows a top-down approach, and involves strategies like –

Overall economic growth of a country.
Reasons that are likely to influence unemployment and inflation.
Fiscal policies are likely to influence factors like interest rates.
Effect of globalization and international trade.
Reasons that affect varying economic growths among countries.

What is Microeconomics?

Microeconomics is the study of “I,” or the individual. In microeconomics, everything is examined from an individual’s perspective.
The word “micro” denotes a small size. In microeconomics, we examine a single firm, a solitary producer, a solitary buyer, etc.
Microeconomics focuses on some aspects of the economy, namely on how people and businesses behave and act.
Microeconomics deal with partial equilibrium analysis

Application of Macroeconomics

In order to study the economy as a whole on both a national and worldwide scale, macroeconomics models the economy using highly aggregated economic data.
Its focal point may be a particular geographical area, a nation, a continent, or even the entire world.
Recurring economic cycles and general economic growth and development are its main research areas.
Foreign trade, government fiscal and monetary policy, unemployment rates, the rate of inflation and interest rates, fluctuations in the Gross Domestic Product (GDP), and business cycles that cause expansions, booms, recessions, and depressions are some of the subjects covered in the studies.

Application of Microeconomics

Microeconomics focuses on the decision-making processes of individual customers and businesses, which might be a single person, a household, a corporation or organization, or a government agency.
Microeconomics examines certain facets of human behavior in an effort to understand how people react to price changes and why they make the demands they do at specific price points.
In order to understand how and why different things are valued differently, how people make financial decisions, and how people can trade, coordinate, and cooperate with one another most effectively, microeconomics aims to explain these phenomena.
Topics in microeconomics include the efficiency and costs of producing products and services, the dynamics of supply and demand, the division and allocation of labor, the structure and operation of commercial enterprises, and how individuals perceive risk, uncertainty, and strategic game theory.

Examples of macro and microeconomics

All of the economy’s aggregate notions, including inflation rates, prices, aggregate demand, unemployment, etc. come under macroeconomics

Real world example of macroeconomics

Globalization has benefited Singapore’s economy.
It has created trade agreements with nations including the US, China, Malaysia, Indonesia, and Japan since developing a free market economy.
The Singaporean economy is currently flourishing in numerous areas, including port trading, tourism, services, banking, biotechnology, and oil.
Macroeconomic factors can also be used to define disease
As an illustration, the Macroeconomics and Fiscal Policy Global Practice (MFM) of the World Bank Group intervened to assist local governments in battling the Ebola virus in 2014 after it struck West Africa.
Microeconomics is the study of supply and demand, elasticity, externalities, and other topics. It can also just be the study of a single person’s demand curve.

Real world example of microeconomics

Global industries have failed to reduce greenhouse gas emissions and stop climate change thus a market failure has occurred.
The healthcare industry depends on everyone. If any group, let’s say nurses, go on strike, the market will collapse.

Principles of Macroeconomics and Microeconomics

The five principles of macroeconomics include: economic output, economic growth, unemployment, inflation and deflation, and investment.
Microeconomics makes predictions about how people will conduct in specific circumstances involving economic or financial transactions using a set of fundamental principles.
These principles include utility maximization, opportunity costs, and the law of supply and demand.

Different Components of Macro and Microeconomics

Components of macroeconomics include all theories relating to the aggregate supply and demand, the inflationary and deflationary gaps, monetary and fiscal policy, the federal budget, and foreign exchange policy, among others.
Components of microeconomics include theory of price determination through supply and demand forces. This includes the theories of production, supply, and demand. It also includes theories linked to the consumer, such as the theory of consumer behavior.

Similarities Between Macroeconomics and Microeconomics

The similarity between microeconomics and macroeconomics is that both aim to improve the economy of their respective domains and branches.
The two have an impact on one another and draw ideas from one another.
Future macroeconomic trends are predicted using microeconomic factors.
The micro-economic elements are determined by macroeconomic tools.
The factors of microeconomics translate macroeconomic objectives.
National budgets influence both macroeconomics and microeconomics.

Limitations of Macroeconomics

It assumes that the aggregates are homogenous while sometimes there can be some heterogeneous as well.
It looks at the broader aspect. So, it may avoid/ not address the welfare of all the individuals.

Limitations of Microeconomics

It has some unrealistic assumptions of complete/full employment
It only covers a small component of economy, thus lacking a bigger picture of a longer term goal.

Differences between Macroeconomics and Microeconomics

S.N.	Macroeconomics	Microeconomics
1.	Looks at the economy as a whole	Looks at individual markets
2.	Studies economic growth, national income, inflation, GDP, etc.	Studies the effect on prices of goods and services
3.	Mainly concerned and focused on the national, territorial and world economies	Mainly concerned and focused on the individual labor markets and consumer behavior
4.	Major factors include: National income Distribution Monetary policies Employment/Unemployment General price level Inflation Productive capacity of economy etc.	Major factors include: Demand Supply Factor pricing Production theory Cost of production Production consumption Labor economics, etc.
5.	Macroeconomics look at typically a nation and how all markets interact to generate a big phenomena	Microeconomics look at how demand and supply interact in individual markets for goods and services
6.	It is applied to external issues and environment	It is applied to internal issues
7.	It solves the major issues of the economy like deflation, inflation, rising prices (reflation), unemployment, and poverty as a whole	It is useful in regulating the prices of the product alongside the prices of factors of production within a certain economy.
8.	Macroeconomics has top-down approach	Microeconomics has bottom-up approach.
9.	Macroeconomics helps us to ensure the optimum utilization of available resources	Microeconomics helps to analyze the goods and services that are required for an efficient economy.
10.	It determines the equilibrium levels of national income and employment	It helps to focus on achieving equilibrium at a small scale
11.	Examples of macroeconomics: National income and savings Rate of unemployment Poverty General price level	Examples of microeconomics: Individual income and savings Price of a particular product Consumer equilibrium Output of an individual organization

References and For More Information

https://www.investopedia.com/terms/e/economics.asp#:~:text=Economics%20is%20a%20social%20science,about%20how%20to%20allocate%20resources

https://www.britannica.com/topic/economics/The-unintended-effects-of-markets

https://www.studysmarter.us/explanations/economics/microeconomics/microeconomics-examples/

https://www.investopedia.com/terms/m/macroeconomic-factor.asp#:~:text=Examples%20of%20macroeconomic%20factors%20include,governments%2C%20businesses%20and%20consumers%20alike

https://study.com/learn/lesson/macroeconomics-principles-examples.html#:~:text=There%20are%20typically%20five%20main,inflation%20and%20deflation%2C%20and%20investment

https://byjus.com/commerce/microeconomics-and-macroeconomics-study-material/

https://www.investopedia.com/articles/personal-finance/032615/how-microeconomics-affects-everyday-life.asp#:~:text=Microeconomics%20uses%20a%20set%20of,opportunity%20costs%2C%20and%20utility%20maximization

https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Micro-and-Macro#:~:text=Little%2Dpicture%20microeconomics%20is%20concerned,that%20economists%20call%20aggregate%20variables

https://www.investopedia.com/ask/answers/difference-between-microeconomics-and-macroeconomics/

https://www.vedantu.com/commerce/difference-between-micro-and-macro-economics