Dr.P.Saradhamani , DoMS, EAB-I Unit 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

M ICRO ECONOMICS AND MACRO ECONOMICS 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit TOPIC MICRO ECONOMICS MACRO ECONOMICS MICRO ECONOMICS 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit MICRO ECONOMICS : 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Meaning : Micro has been derived from GREEK word “MIKROS”which mean small . It is a study of the individual units of economic system . In other words a small part of economy & not the whole economy . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit DEFINATION : Prof. Mac cannel, “micro economics is a study of the specific economic units and a detailed consideration of the behavior of these individual units ” . Prof.Boulding, “micro economics seeks to explain the working of individuals,firms,households,individual prices,wages,particular industries ” . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Subject-matter : It deals with determination of product prices and factor of prices . In short , it is concerned with the determination of prices like theory of production,theory of rent,wages.Interest,profit & economic welfare . It also known as PRICE THEORY . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Merits : A worm’s eye view of a small specific unit. Formulating economic policies and scarce resources of the country. Achieve maximum output with minimum costs. It is helpful for macro economic studies. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Limitations : It does not give the correct pictures of the working of the economy . It does not provide solution to certain economic problems . The area of study covered by it is limited . It cannot be abruptly applied to the study of macro economic problems . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit MACRO ECONOMICS : 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Meaning : Macro is been derived from the Greek word “MAKROS”which means LARGE. Macro economic is the study of large part of the economy i.E.,The whole economy. The study of economic behaviour of the economy as a whole & not the individual economic units of the economy. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit DEFINATION : Prof. Boulding, “ Marco economics deals not only with individual quantities but with the aggregates of these quantities , not with the individual incomes , but with national income , not with individual prices , but with prices level , not with individual outputs but with the national output ” . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Subject Matter : It deals with total consumption, total savings , total investment , total output, total or national income, inflation & deflation economic growth, etc. In other words it is concerned with the analysis of income & employment in the economy as a whole . Theory of income & employment . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Merits : A bird’s eye-view of the entire economy . Macro economic is more useful in solution to economy problems. It is quite helpful in formulation of GOVT. Economic policies. Study of macro economic is useful to micro economic studies. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Limitations : The study of individual units becomes more useful than study of aggregates. It is useful for for develop countries for solving their problems but less useful or undeveloped country. It studies the economy in general or in detail . 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Conclusion : It is true that macro economic is more realistic and more useful than micro economic . but this is not that micro economic should be given up . in fact both cannot adequately explain working of economic system . Both the approaches are inter-related inter-dependent & complementary to each other . Both are necessary for a perfect study of economics. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Micro Economics Macro Economics Micro economics studies the decisions made by individual and business concerning the distribution of resources and prices of goods and services. Macroeconomics, studies the behavior of not only particular company or industries but whole economy. It deals with a specific industry or a sector, the connections of firms and households in the market. It includes understanding how unemployment, price levels, growth rate affects the economy wide aspects such as the Gross National Product (GNP) For example, microeconomics would study how a company could lower its prices to increase its product demand in the market. For example, macroeconomics would look at how an increase/decrease in net imports would affect a nation's capital account. It deals with the decision making of single economic variables such as the demand, price, consumer, etc It deals with averages and aggregates of the entire economy such as national income, aggregate output, aggregate savings etc. It is narrow in scope and interprets the small constituents of the entire economy. It has a wide scope and interprets the economy of a country as a whole. Micro economics studies the decisions made by individual and business concerning the distribution of resources and prices of goods and services. • It deals with a specific industry or a sector, the connections of firms and households in the market. • For example, microeconomics would study how a company could lower its prices to increase its product demand in the market. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit Micro Economics Macro Economics It is also known as the price theory because it explains the process of economic resources allocation on the foundation of relative prices of several goods and services. It is also known as the income theory because it explains the changing levels of national income of an economy during a period of time. It deals with the flow of various factors of production from a single owner to a single user of those resources. It deals with the circular flow of income and expenditure between different sectors of the economy. It helps in developing policies appropriate resource distribution at firm level. It helps in developing policies appropriate resource distribution at economy level such as inflation, unemployment level etc. 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit

Dr.P.Saradhamani , DoMS, EAB-I Unit THANK YOU 6/3/2018 Dr.P.Saradhamani , DoMS, EAB-I Unit