What is the difference between microeconomics and macroeconomics?
The difference between microeconomics and macroeconomics are:
Point of Difference | Microeconomics | Macroeconomics |
---|---|---|
Definition | It is a branch of economics that studies the Economic variables at an individual level like the households, the firms, the consumer etc. | It is a branch of economics that studies the economics variables of an economy as a Whole. |
Deals with | It deals with how consumer or the producers make decisions depending on their given budget and other variables. |
It deals with how different economics sectors like households, industries and other government and foreign sectors make their decisions. |
Method | The method of partial equilibrium (i.e. equilibrium is one market) is used. | The method of general equilibrium (i.e. equilibrium in all the markets, simultaneously) is used. |
Variables | The major variables involved are prices, consumers demand, wages, rent, profit, firms, revenue, cost etc. | The major variables involved are aggregate demand, aggregate supply, inflation, unemployment, poverty, etc. |
Theories |
Various theories studied are: 1. Theory of consumers behaviour and demand |
Various theories studied are 1. Theory of national income 2. Theory of money 3. Theory of general price level 4. Theory of employment 5. Theory of international trade |
Popularised by | Alfred Marshal | Keynes |
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What is a barter system? What are its drawbacks?
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Distinguish between revenue expenditure and capital expenditure.
What are official reserve transactions? Explain their importance in the balance of payments.
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Explain the relation between government deficit and government debt.
Suppose C = 40 + 0.8Y D, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y
(a) Find equilibrium income. (b) Find the net export balance at equilibrium income (c) What happens to equilibrium income and the net export balance when the government purchases increase from 40 and 50?
If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?
Calculate the open economy multiplier with proportional taxes, T = tY, instead of lump-sum taxes as assumed in the text.
Differentiate between devaluation and depreciation.
What is High Powered Money?
Explain ‘Paradox of Thrift’.
Are fiscal deficits inflationary?
‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.