Micro_Macro_Scope_Importance_of_Economics.pptx

here we have describe the types of economics

1. Microeconomics , Macroeconomics, and Scope & Importance of Economics

2. - Understand the difference between Microeconomics and Macroeconomics. - Explain the scope and importance of economics. - Recognize how economics applies to individuals, businesses, and governments. Learning Objectives

3. Meaning: Microeconomics studies individual economic units such as households, firms, and markets. Focuses on how decisions are made by individuals and businesses. Term 'micro' derived from Greek 'mikros' meaning small. Introduction to Microeconomics

4. According to K.E. Boulding: 'Microeconomics is the study of particular firms, particular households, individual prices, wages, incomes, individual industries, and particular commodities.' In simple terms: It studies how limited resources are allocated among alternative uses by individuals and firms. Definition of Microeconomics

5. - Individualistic approach – studies consumers and producers. - Explains price mechanism – demand and supply interaction. - Focuses on resource allocation and efficiency. - Uses marginal analysis for decision-making. - Assumes 'ceteris paribus' – other things remain constant. Main Features of Microeconomics

6. - Determines prices of goods and factors of production. - Explains consumer and producer behavior. - Basis for economic policies and taxation decisions. - Ensures efficient allocation of resources. - Helps understand different market structures. Importance of Microeconomics

7. - Ignores aggregate issues like unemployment and inflation. - Relies on unrealistic assumptions (perfect competition, rational behavior). - Deals only with partial equilibrium. - Limited in addressing long-term or policy-level issues. Limitations of Microeconomics

8. Meaning: Macroeconomics studies the economy as a whole — total income, output, employment, and price level. Term 'macro' from Greek 'makros' meaning large. Developed largely by John Maynard Keynes after the Great Depression. Introduction to Macroeconomics

9. According to J.M. Keynes: 'Macroeconomics is the study of aggregates — total goods and services produced, total income, total employment, and general price level.' In simple terms: Macroeconomics examines the overall functioning and performance of the economy. Definition of Macroeconomics

10. - Aggregate analysis of income, output, and employment. - Studies general price level and inflation. - Concerned with economic growth and stability. - Focused on government policies – fiscal and monetary. - Emphasizes interdependence among economic sectors. Main Features of Macroeconomics

11. - Helps estimate national income and output. - Guides policymakers in planning and forecasting. - Explains business cycles, inflation, and unemployment. - Supports formulation of fiscal and monetary policies. - Aids in international economic analysis and trade. Importance of Macroeconomics

12. - Overgeneralization of individual differences. - Aggregate data may hide inequalities. - Depends on simplifying assumptions (full employment, stability). - Policy effects take time – possibility of time lags. Limitations of Macroeconomics

13. Basis | Microeconomics | Macroeconomics ------|----------------|---------------- Meaning | Study of individual units | Study of the economy as a whole Focus | Prices, production, resource allocation | National income, employment, price level Approach | Partial equilibrium | General equilibrium Policy Use | Business decisions | Government policymaking Example | Market for wheat | National economy Comparison Between Micro and Macro

14. Economics is a social science that studies how people use limited resources to satisfy unlimited wants. Scope includes: 1. Consumption – satisfaction of wants. 2. Production – creation of goods. 3. Exchange – market transactions. 4. Distribution – sharing of income among factors. 5. Public Finance – role of state in economy. 6. Welfare Economics – social well-being. Meaning and Scope of Economics

15. For Individuals: - Rational decision-making and budgeting. For Businesses: - Guides pricing, production, and investment. For Governments: - Helps design fiscal, monetary, and trade policies. For Society: - Promotes equitable distribution of resources and welfare. For Developing Countries: - Supports planning and sustainable growth. Importance of Economics

16. - Helps understand globalization and world trade. - Explains inflation, unemployment, and development problems. - Aids in achieving sustainable economic growth. - Enhances understanding of economic interdependence globally. Role of Economics in Modern Life

17. - Microeconomics studies individual decisions and market behavior. - Macroeconomics analyzes overall economic performance and policy. - The scope of economics extends from household choices to national planning. - Economics remains vital for personal, national, and global progress. Conclusion