economic speech

Running head : Microeconomics and Macroeconomics

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Microeconomics and Macroeconomics

Microeconomics is a branch of economics which deals with the study of resource allocation decisions within the confines of the sub-segments of an economy such as households and business firms (Arnold , 2010 . Central to this study is an examination of how prices of goods and services in a market influence their demand and supply . Macroeconomics on the other hand deals with the study of the nature of the economy as a whole national , regional

or a global economy (Agarwal , 2007 . It deals with such issues such as GDP (Gross Domestic Product ) and the influences of a larger economy such as employment and inflation

The main difference is thus the scope of study since it can be argued that microeconomics is a subset of macroeconomics . Another difference is that microeconomics focuses on consumers and businesses while macroeconomics deals with industries and nations (Arnold , 2007 Additionally , microeconomics deals with the forces of demand and supply in a market while macroeconomics studies the effect of such issues as interest rates , exchange rates and employment output on a national scale . Generally , microeconomic studies take a bottom-up approach while the macroeconomic studies take a top-down approach

An example of a microeconomic phenomenon would be on pricing policies . A company may want to know what price to charge for a product they are introducing to the market . This is a microeconomic decision since to answer such a question , knowledge of the nature of...