Question

Write a 500-750 word paper describing the field of economics as a whole. Be sure to note the differences between micro and macroeconomics as well as the similarities between these two divisions of economics.

Answer 1

Economics is a broad topic of optimal resource distribution in society. There are several different branches within the topic which concentrate on various aspects. There are also different schools of thought that typically have different views on economic aspects.

Microeconomics and macroeconomics are the first way to split the economy.

Microeconomics–concerned with individual markets and with small economic aspects.

Macroeconomics–the whole aggregate economy is concerned. Issues like inflation, economic growth, and commerce.

The basis of modern economics is often considered to be classical economics. Adam Smith, David Ricardo, built it. Classical economics is based on free-market activities. How the invisible hand and market mechanism can allow efficient resource allocation Classical economics suggests that economies generally work most efficiently when government intervention is minimal and concerned with private property protection, free trade promotion, and limited government spending.Classical economics recognizes that the provision of public goods such as defence, law and order and education requires a government.

Neo-classical economics focused on the basis of traditional free-market economics. It included new ideas like maximizing the utility. The theory of rational choice Evaluation conditional. How people make marginal decisions–choosing the best option given the marginal cost and benefit. Neo-classical economics is often known as conservative economics. It is the economics taught as the starting point of teaching economics in most textbooks. Neo-classical economics tools (supply and demand, rational choice, maximization of usefulness) can be used in new and critical fields as well.

Keynesian economics was developed against the background of the Great Depression in the 1930s. To justify the ongoing economic depression and mass unemployment, the existing economic theory was at a loss. Keynes indicated that for many reasons (e.g., thrift paradox, negative multiplier, low confidence) markets were not obvious. Keynes then called for government intervention to kick-start the economy. Keynesian economics is credited as a distinct study to the creation of macroeconomics. Keynes concluded that the aggregate economy would function on individual markets in very different ways, and it required different rules and policies.

Monetarism was partially a response to the post-war hegemony of Keynesian economics. Monetarists, led by Milton Friedman, argued that Keynesian fiscal policy was far less successful than indicated by Keynesians. Monetarists advocated former classical ideals, such as believing in market efficiency.

Microeconomics and macroeconomics vary, but distinguishing them may sometimes be difficult. Microeconomics is concerned with an enterprise's individual behavior to determine the production volume that maximizes an enterprise's income. The microeconomics focuses in general on trends of supply and demand, pricing and production in individual markets. Macroeconomics focuses on analyzing the economy as a whole, not just specific businesses, but a sector as a whole. The study therefore examines how the economy as a whole is affected by factors such as GDP, inflation, unemployment and other factors.

Microeconomics is concerned with demand and supply factors, while macroeconomics is diminishing the performance of the overall economic situation and measuring the pace of economic growth and national income change.

Microeconomics facilitates the decision-making process within the country of small business sectors. Macroeconomics focuses on changes in the rates of unemployment, large industries and the economy as a whole. Although in their respective areas of interest, microeconomics and macroeconomics vary from each other, there is a close relationship between them. Macroeconomics is focused in its research and in studies of large economic units on many theories and study of microeconomics.

The relationship between microeconomics and macroeconomics is also due to the fact that aggregate production and consumption rates are the consequence of household and individual business choices.