There are differences between microeconomics and macroeconomics, although, at times, it may be hard to separate the functions of the two. Microeconomics and macroeconomics are the two major categories within the field of economics. Microeconomics is the branch of economy, especially such topics as markets, prices, industries, demand, and supply. Microeconomic concentrates on the difficulties of the markets for services and goods, and how the price affects the growth of the markets (Microeconomics 2000-2010). Microeconomics examines the behavior of individual economics entities: firms and consumers.
How do individuals make consumption decisions? How do firms make profits and price their goods and services. The main focus of microeconomics is markets, wage markets, the market for gasoline, rent markets, etc. Macroeconomics is the branch of economics that studies the entire economy, especially topics as aggregate production, unemployment, inflation, and business cycles. Macroeconomics is a vast field that concentrates on two areas, economic growth and changes in the national income (Macroeconomics 2000-2010). Macroeconomics asks questions like; why does the U. S. conomy generally experience higher rates of growth than European economies? What causes inflation? What effect does the national debt have on economic growth? Economic goals have five conditions of the mixed economy, including full employment, stability, economic growth, efficiency, and equity, that are generally desired by society and pursued by governments through economic policies. The five goals are typically divided into the two that are important for microeconomics (efficiency and equity) and the three that are important for macroeconomics (full employment, stability, and economic growth) (Economic Goals 2000-2010).
Efficiency and equity are the two-microeconomics goals most relevant to markets, industries, and part of the economy and are thus important to the study of microeconomics. Efficiency is achieved when society is able to get the greatest amount of satisfaction from available resources. Equity is achieved when income and wealth are fairly distributed within society (Economic Goals 2000-2010). Full employment, stability, and economic growth are the three macroeconomic goals most relevant to the aggregate economy and consequently are of the prime importance to the study of macroeconomics.
Full employment is achieved when all available resources labor, capital, land, and entrepreneurship are used to produce goods and services. Stability is achieved by avoiding or limiting fluctuations in production, employment, and prices. Economic growth is achieved by increasing the economy’s ability to produce goods and services (Economic Goals 2000-2010). Each goal, achieved by itself, improves the overall well being of society. Examples of Microeconomics and Macroeconomics
Microeconomics, focus on the supply and demand side, which refers to the behavior of people as they interact with one another in competitive market (Mankiw 2009). When a national disaster such as a hurricane hits a region, basic commodities, such as gasoline and bottled water experience increasing demand and shrinking supplies. Even with the cost of gasoline going up every week, the demand is still very high. With the supply of gasoline going down the cost is getting higher just to keep up with the demand of gasoline.
I spend about 40 dollars a week to keep gasoline in my car so I can get back and forth to work and to do me daily errands. Macroeconomics focus on changes in employment rates, inflation, and interest rates. Loans were made, by banks and mortgage companies like Freddie Mac and Fannie Mae to people who simply could not afford to repay them back. When the mortgage crisis was happen I went to apply for a loan to get a house so I could get the 8,000 house credit I was turn away even with me having a good job and being on my job for over 3 years.
They only wanted to give out loans to people who had a 770 credit score or higher. My credit score is not bad around 685 but in the recent year, I just went through a divorce that had a very negative effect on my credit score. With all the economic downfalls, this has affected my family and me very much. I have to work harder so I can provide food for my son and childcare keep going up just to keep up with the rises in prices for goods. As a single mother lately, I have to budget a lot and cut out many fun actives just because I can no longer afford them.
Reference: Macroeconomics, Amos Web Encyclonomic WEB*pedia, Retrieved October 19, 2010 from http://www. AmosWEB. com, Amos WEB LLC, 2000-2010 Microeconomics, Amos Web Encyclonomic WEB*pedia, Retrieved October 19, 2010 from http://www. AmosWEB. com, Amos WEB LLC, 2000-2010 Economic Goals, Amos Web Encyclonomic WEB*pedia, Retrieved October 20, 2010 from http://www. AmosWEB. com, Amos WEB LLC, 2000-2010 Mankiw N. Gregory. Principles of Economics (fifth edition) South-Western Cengage Learning