The two main branches of Economics

 

The two main branches of Economics are microeconomics and macroeconomics.

 

Microeconomics

It is a small-scale economics analysis. It examines individuals and businesses, as well as the circumstances in which they make purchasing, consuming, and production decisions.

Microeconomics examines some elements of human behavior in order to understand how people react to price changes and why they demand what they do at specific price levels. Microeconomics aims to explain how and why various products are valued differently, how people make financial decisions, and how people trade, coordinate, and collaborate with one another in the most efficient way possible.

Microeconomics covers everything from supply and demand dynamics to the efficiency and costs of creating products and services; it also covers how labor is split and distributed, how businesses are organized and run, and how individuals deal with uncertainty, risk, and strategic game theory.

Microeconomics, for example: Production of a sugar mill, Car industry, Wage determination in a company, Household expenditure etc.

So, it would examine how a single firm might maximize its production and capacity in order to decrease prices and compete more effectively in its sector.

 

 

Macroeconomics

Macroeconomics is the study of an economy's overall behavior and performance. It concentrates on the economy's overall developments, such as unemployment, growth rate, GNP, and inflation.

Macroeconomics examines the economy's aggregate indicators as well as the microeconomics variables that impact it. Macroeconomic models are used by the government and companies to aid in the formulation of economic policies and strategies. Aggregate supply and aggregate demand are macroeconomics' two major instruments.

Macroeconomics, for example: Inflation rate, Aggregate demand, Supply of money, Foreign exchange rate.