As we know that economics is that subject which has so many branches . But main two section of economics is micro and macro . Micro economics and macro economics are the two approaches. The former relates to the study of individual economic units while the later is the study of the economy as a whole . ” Ragner Frisch ” was the first to use the terms ” micro and macro” in the Economics in 1933.
MICRO ECONOMICS:– Micro economics is the study of the economic actions of individuals and small groups of individuals . This includes according to Prof. Boulding “the study of particular prices , wages, income , individual industries , particular commodities. It concerns itself with the analysis of price determination and the allocation of of resources to specific uses . The determination of equilibrium output of firm and industry , the wage of a particular type of labor , the price of a particular commodity like rice , tea or car are some of the field of micro- economic theory .
Micro economics is in fact , a microscopic study of the economy. – according to’ Maurice Dobb’. It is like looking at the economy through a microscope to find out the working of market for individual commodities and the behaviour of individual consumers and producers.
MACRO ECONOMICS:–Macro economics is the study of aggregates or averages covering the entire economy , such as total employment, national income , national output , total investment, total consumption, total savings, aggregate supply , aggregate demand and general price level, wage level and cost structure.
Macro – economics is also known as the theory of income and employment , economic fluctuations , inflation or deflation , international trade and economic growth . It is the study of the causes of employment and the the various determinants of employment . In the field of business cycles, it concerns itself with the effect of investment on total output , total income and aggregate employment . In the monetary sphere it studies the effect of the total quantity of money on the general price level . In international trade the problems of balance of payments and foreign aid fall within the purview of macro- economic analysis . Above all , macro economic theory discusses the problems of determination of the total income of a country and causes of its fluctuations . Finally , it studies the factors that retard growth and those which bring the economy on the path of economic development.
NEED FOR INTEGRATION MACRO AND MICRO ECONOMICS. :–
Neither of two approaches can explain and analysis economic principles and behaviour separately . So there is need to combined these two approaches to give proper and true explanation of economic theory . What is true of the parts may not be true of the whole and what is true of the whole may not apply to the parts . It is very essential therefore to integrate the two approaches, if we wish to get correct solution of our main economic problems.Take a period of unprecedented prosperity in an economy.Even in such boom condition it is not uncommon to come across examples of individual industries which may be languishing or may be more dead than alive. Likewise in a period of deep depression there may yet be some individual industries which may be enjoying great prosperity .Now to apply the macro approach to such individual industries would obviously be wrong and it would be equally wrong to apply the micro analysis of these industries to the economic system as a whole.
What is needed is a proper integration of the macro and micro approaches to such problem which have no micro- aspects.It is therefore only proper to marry the two approaches both in analyzing the economic problems and in preserving policy measure for tackling them. Ignoring one and exclusively concentrating attention on the other may often lead not only to inadequate or wrong explanation or even disastrous remedial measures.
CONCLUSION:- Thus according to the views of the economists today , the subject matter of economics includes price theory [ or micro economics] income and employment theory [ macro- economics ] and growth theory . Hence broadly speaking economics may be described as a study of the economic system under which men work and live . It deals with decisions regarding the commodities to be produced and services to be rendered in the economy, how to produce them most economically, distribute them properly and to provide for the growth of the economy .-#-