Importance of Micro and Macro

1. Concepts of Micro and
Macro Economics
MRS.PADMAVATI PATIL

2.  Microeconomics and Macroeconomics terms were used by Ragnar Frish.
 Micro and Macro words are derived from Greek words Mikros and Makros.
 Micro means Small –Which studies Individual unit of the economy.
Individual Consumer, Individual firms and small
aggregates or groups of individual unit, industries and market.
 Macro means Large – Which analyze the economy as a whole.
Large aggregates – such as national income and output, total
employment, total consumption, aggregate investment.
Introduction

3. Definition of Micro Economics
Prof. Maccannel. “Micro economics is a study of the specific economic
units and detailed consideration of the behavior of these individual
units.”
Prof. Boulding. “Micro Economics seeks to explain the working of
individual, firms, households, individual prices, wages, particular
industries.”

4. Subject Matter of Micro Economic

5. Importance of Micro Economics
 For Price determination
 Helps in Decision –Making
 Guide for Production Planning
 Useful for forecasting
 Art of Economizing
 Useful for Government
 Welfare Oriented

6. Definition of Macro Economics
According P.A. Samuelson -
“The Study of the behaviour of the economy as a whole, it examines the overall level
on nation's output, employment, prices and foreign trade.”
According Kenneth E Boulding –
“ Macro economics is the study of the nature, relationship and behaviour of
aggregates of economic quantities…macro economics deals not with individual quantities
as such, but with aggregate of these quantities…not with individual incomes, but with the
national Income not with individual prices, but with the price levels, not with individual
output, but with the national output.

7. Subject Matter of Macro Economic
 Theory of National Income
 Theory of Output and Employment
 Theory of General Price Level
 Theory of Economic Growth
 Theory of International Trade
 Theory of Money.

8. Importance of Macroeconomics:
 To Understand the Working of the Economy
 Important Nature of Macroeconomic Issues
 Importance for Accelerating Economic Growth
 Understanding Business Cycles
 Formulating Government’s macroeconomic policies
 Individual Decision Making
 Importance in Business Decisions.