For a long time, the economy has been what has connected every human being, so everyone should pay attention to the study of economics. In this article, you will get to know the importance and purpose of studying micro and macroeconomics.

Origin of Micro & Macro Economics

In the 1930s, the global economy entered the Great Depression because market forces were unable to return the economy to its initial balance and there was an excess of unemployment around the world.

Due to John Maynard's proposal to resolve the economic crisis through Aggregate Demand Management, this crisis had a significant impact on the confidence and faith in the Classical Economics concept. Keynes has discredited the conventional market norms.

John Maynard Keynes' ideas were compiled and published in a book entitled "The General Theory of Employment, Money and Interest" in 1936. Later, this book became the source of the scope of economic studies.

Micro & Macro Economic Studies

Economic studies can be classified into two categories:

1. Microeconomics

Microeconomics is the study of how specific economic entities, such as producers, consumers, and owners of inputs to production, behave while deciding how to allocate resources and set prices for their products.

Microeconomics, in its simplest form, is the study of people and business choices based on supply and demand.

2. Macroeconomics

Macroeconomics is the study of how large economic entities behave and examines the economy as a whole rather than specific people or businesses.

The primary focus of macroeconomics is on the gross economy and the statistical relationships that influence a nation's entire economy, including the Gross Domestic Product (GDP), unemployment rate, and international commerce.

This is why governments use macroeconomics as a tool for analyzing their administration plans and formulating economic and fiscal policies in order to maintain an efficient and stable economic system.

Macroeconomics’ Objectives

1) Economic Progress

When the economy grows, it shows that the government is able to manage resources to enable the population to live well, which can be measured from Real National Income and Per Capita Real Income.

2) Economic Stability

In a stable economy, pricing for goods and services remain relatively constant. The Price Index, the Consumer Price Index, and the employment rate indicate economic stability.

As for economic stability from external forces, the exchange rate of domestic and foreign currencies demonstrates that the government can intervene if the currency is too weak or too strong.

3) Economic Justice

In contrast to the limitless requirements of the population, finite resources compel governments to manage resources equitably.

In order to make income distribution as equitable as feasible, the government handles it by redistributing income, providing property rights, charging everyone the same amount for essential utilities, and enacting progressive taxes.

4) Economic Freedom

Economic liberty is that citizens have the right to conduct economic activities, to choose their consumption, and to do other activities in the economy which may depend on the political regime.

The Importance of Macroeconomics

Macroeconomics is related to the overall economic system which affects the well-being of all people as follows:

1) Importance to the General Public

Most of the people in the nation are its citizens. People who are informed of the state of the economy will be able to respond to changes in the market quickly and be conscious of any potential effects on themselves.

2) Relevance to Business Owners

 Business Owners must rely on economic information when making management choices since it enables them to adjust to economic changes and lower risks that may result from changes.

3) Importance to Investors and Experts

Macroeconomic data can be used as an analytical tool by economists and investors to develop forecasts for the economy.

Conclusion

In conclusion, macroeconomics studies decisions made by nations and governments, whereas microeconomics studies decisions made by people and businesses.

Economics education is a crucial topic that affects people at all levels; therefore, everyone should comprehend this information for their own benefit.

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