Economics economic science microeconomics macroeconomics. Relationship between microeconomics and macroeconomics
Microeconomics is a science that studies the subjects of economic relations, their functioning among themselves in the course of economic activity. It is microeconomics that studies everything that happens at the lowest level of consumer relations, why transactions are made, and on what basis this or that product is bought.
How the choice of the subject of market relations can affect the decrease or increase in prices for goods and the level of their income. How the number of workers in the company is distributed and how it is decided how much to work. All this is a modest study of the science of microeconomics.
Macroeconomics is a science that studies the holistic functioning of the economy. It is she who generalizes economic relations and economic phenomena into a single whole. Many economists argue that macroeconomics is exactly what microeconomics absorbs or is a common component of it.
History of the development of macro and microeconomics
The history of the development of macro and microeconomics began quite a long time ago. At the same time, it was in 1934 with the advent of Keynes' "The General Theory of Employment, Interest and Money" that macro and microeconomics began to exist in history as different subjects for study. Prior to this, more attention was paid to the general economic relations of market entities.
Until the 1930s, such a concept as macroeconomics practically did not exist, and already from the beginning of the 1940s, its active study began. Unfortunately, until the 1980s, such a study was of little result, but after this period, the rapid development of this type of economy begins. An active study of economic policy and its development, long-term and short-term relations began. There were many disputes on this basis, which is why various schools were sent to manifest, which explained everything in their own way. Mercantilism, Marxism, Austrian and classical schools, Keynesianism, monetarism - all these directions corresponded to their periods and formed the modern theory of macroeconomic thought.
In turn, microeconomics also did not stand still. The appearance of differential calculus as early as 1826 gave impetus to the development of other factors. This is followed by an analysis of the behavior of firms in the market and a study of the psychological factor of the behavior of subjects of economic relations. The Austrian school also contributed to the development of microeconomics by discovering the principles of marginal utility. For a huge period of time, the economy is replenished with new and new teachings and theories that shape it.
Differences between macro and microeconomics
To explain in detail how macro and microeconomics are distinguished, one needs to understand the scale of the work of each of them. Macroeconomics studies the functions of all theories and their functionality in general, for example in a country. This is the study of global economic processes that apply to its entire territory as a whole. Microeconomics studies certain types of market relations.
The main difference between macro and micro economics is the field of activity. Competition in the market, the formation and fluctuations of prices, the functioning of markets, the mechanisms of supply and demand - all this is the essence of the work of microeconomics. In addition, microeconomics studies in detail the essence of each consumer, his motivation and behavior, and this also applies to producers. This is a more subtle and detailed internal process of studying all the factors of economic relations. Whereas macroeconomics studies the working of economic functioning between the markets of the whole economic system.
Modern economic theory uses two levels of analysis: macroeconomic And microeconomic. Macroeconomics and microeconomics are interrelated sections of the economy (as a science) that study the relevant processes in the economy (as an economy). As follows from the names of these sections, they differ in the scale of the studied economic processes. This is manifested primarily in the number and level of economic entities represented at these levels of analysis. The same economic issues can be considered in both macroeconomics and microeconomics, but their studies will be of a different nature. At the same time, stable complexes of studied economic issues are characteristic of each level of economic analysis.
Macroeconomics (from gr. markos- long, large |
Microeconomics (from gr. mikros- small) |
This is the science of the economy as a whole, the economy of the state and even the world economy. | This is the science of consumers (households) and producers, of individual sectors of the economy. |
There are three actors: the firm, the household and the state. | There are two entities: the firm and the household. |
Explores issues of the macroeconomic level: economic growth rates, GDP indicators, changes in the well-being of the population, inflation, unemployment, etc. - something that characterizes national and international economic phenomena. | Explores issues of the microeconomic level: consumer choice of products, the company's business plan, family budget planning - causal and functional relationships that affect economic decision-making both by individuals and firms. |
Strives more for stability. | Strives more for dynamics, growth. |
Subject to the principle of social effect. The economic policy of the state is closely connected with social policy. | Subject to the principle of market expediency. Manufacturing firms strive for maximum profit and do not solve emerging social problems. |
Taking into account the differences between macro- and microeconomics helps to build mechanisms for regulating macro- and microeconomic processes.
Question:
Establish a correspondence between the levels of economic analysis and indicators of economic development: for each position given in the first column, select the corresponding position from the second column. Write down the resulting sequence of numbers.
Answer
Ragnar Frisch (1895โ1973) - Norwegian economist, Nobel laureate (1969).
He defended his doctoral dissertation at the University of Oslo, Professor of Social Economics and Statistics, Director of the Institute of Social Economics at the University of Oslo.
Winner of the Nobel Prize "for the creation and application of dynamic models to the analysis of economic processes." Winner of the Schumpeter Prize, Antonio Feltrinelli Prize. Member of the Norwegian Academy of Sciences, the British Royal Statistical Society, the American Economic Association and the American Academy of Arts and Sciences.
President of the Econometric Society (1949). In honor of him, the Econometric Society has been awarded the Frisch Medal since 1978.
In the economic theory of our time, two levels of analysis are distinguished - this. What is the difference between these two opposite terms "macroeconomics" and "microeconomics"? This division allows us to answer various questions of interest to mankind. Which of the directions is a priority? Let's understand what macroeconomics and microeconomics are.
What is macroeconomics
Based on history and classics
Macroeconomics, as a full-fledged doctrine, arose after the total depression of the 30s. The source of this science is considered to be the publication in 1936 of an article by the British financier Mr. Keynes. Parliament in those days was interested in every possible way to raise the level of prosperity of its citizens, and needed methods to eliminate the financial cataclysm.
The meaning of Keynes's article was that market economies cannot perform self-regulation every time, as the classics believed, since it happens that the price reacts slowly to changes in supply or demand.
What is macroeconomics?
In modern society
Macroeconomics is the doctrine of economic growth and stability.
Macroeconomicsdeals with cases that relate to the financial condition of the whole state, and the world. What is macroeconomics according to financiers? This type of economy is characterized by a desire for stability, because macroeconomics is considered at the level of the state, its rating; or the world in general.
There are three main actors in macroeconomics:
State;
Firm;
The household.
What is microeconomics, according to economists?
Microeconomics is the science of the behavior of enterprises and, accordingly, consumers.
Microeconomicsdeals with tasks related to the economy of specific firms and industries, as well as consumers. This type of economy is characterized by a desire for growth and dynamics. What is microeconomics?
Microeconomicsaffects the interests of a particular producer and consumer. It is always profitable for a producer to produce as much of a product as possible and sell it for the highest possible price. Therefore, it is microeconomics that solves these problems.
In microeconomics, such a subject as the state disappears, and we are talking only about the firm, the household and their interaction.
is an area in which everything comes down more to market expediency. Because directly the manufacturer seeks to obtain the greatest benefit for himself. The consumer seeks to purchase the corresponding product at the lowest possible price.
Let's summarize what is microeconomics and macroeconomics. Microeconomics is engaged in solving problems of the operational absolute involvement of all reserves and capacities of the enterprise, and macroeconomics seeks to understand the sources of unemployment and downtime of enterprises. Macroeconomics has to worry about solving the problems of unemployment or inflation and therefore builds models of underemployment.
Watch the video what is macroeconomics and microeconomics
Macroeconomics- part of economic theory, exploring the patterns of functioning and trends in the development of the country's economy as a whole.
Unlike microeconomics, macroeconomics does not study the problems of the functioning of individual markets, the features of pricing in conditions of perfect and imperfect competition, does not consider the mechanism of interaction between supply and demand in the markets for factors of production, leaves the motivation behind the analysis of the behavior of an individual consumer or an individual producer in the market. Macroeconomic analysis requires abstraction from the differences between individual markets and the discovery of key moments in the functioning of an integral economic system.
The macroeconomic approach to research has a number of features.
1. Unlike microeconomics, macroeconomics uses aggregate quantities in its analysis, such as GDP (gross domestic product), and not the output of an individual firm; the price level in the economy, not the prices of specific goods; the market rate of interest, and not the rate of interest of an individual bank, etc. The aggregate aggregates also unite the main subjects of the national economy - producers and consumers.
2. Macroeconomics leaves out of its analysis the behavior of individual economic agents - households and firms. In microeconomic analysis, the decisions of producers and consumers (households) are examined as independent, while macroeconomic analysis is designed to take into account the interactions between producers and households through a system of interrelated markets - commodity and resource.
3. With a macroeconomic approach, the number of economic entities is expanding. This includes, in addition to producers and consumers, the state, and when analyzing the economy as an open system, foreign producers and consumers, as well as governments of other countries, are taken into account (also in the form of aggregated aggregates). In microanalysis, the influence of external economic factors on the behavior of individual consumers, producers, and the situation on local markets is usually not taken into account.
Macroeconomics deals with the study of the problems of the effective functioning of the national economy as an integral system. The object of macroeconomic analysis is the conditions, factors and results of the development of an integral economic system, the study of large-scale economic problems.
Thus, macroeconomics reflects the integrity of the entire national economy. This integrity is manifested not only in the relationship and interaction of economic entities through the system of markets, but also in specific patterns, relationships and facts.
1. Macroeconomics- not just the total mechanical sum of all elements of the national economy - various local industry, regional, resource markets, the sum of many consumers and producers. Macroeconomics is a set of economic relations that unite and connect all the individual elements of the national economy into a single entity. This integrity is shown:
In the presence of a general division of labor between large areas of production, both within the entire economy and by region;
The existence of labor cooperation, which ensures economic and production interdependence between the structural divisions of the economy;
The existence of a national market, which is a single economic space of the country.
2. The material foundation of macroeconomics is material wealth, which in a broad sense should be understood as the totality of all the country's resources that are a necessary condition for the production of goods and ensuring the lives of people.
For your information. The assets accumulated and available at the disposal of society at any given moment in the form of means of production and consumer goods, as well as natural resources, constitute the national wealth of society. There are two components in national wealth - tangible and intangible national wealth. Material national wealth - social wealth created by labor and accumulated by a number of generations and natural wealth, which includes the natural resources of society. Intangible wealth is part of the national wealth, including the accumulated spiritual values โโof society - the achievements of science, culture, education, and art. Economic development and progress assumes that both material and non-material prerequisites for production in the economy are simultaneously accumulating and improving.
3. Macroeconomics presupposes the existence of a specific economic base designed to meet national needs and interests: the production of public goods and the organization of their collective consumption; availability of a nationwide infrastructure (industrial and social); the conduct of economic policy by the state in the interests of the whole society - one of the most important manifestations of the integrity of the national economy.
Structurally, modern economic theory is divided into two sections: microeconomics and macroeconomics. Microeconomics studies the behavior of individual economic agents: individuals, households, enterprises, owners of primary production resources. It focuses on prices and volumes of production and consumption of specific goods, the state of individual markets, the distribution of resources between alternative goals.
Macroeconomics studies the functioning of the economic system as a whole and its major sectors. The object of its study is the national income and social product, economic growth, the overall level of employment, total consumer spending and savings, the general price level and inflation. Microeconomics is also often referred to as price theory, although it studies only relative prices, i.e. relative prices of individual goods, leaving the problem of the absolute level of prices to macroeconomic analysis, which is sometimes also called the theory of national income and employment. We can say that microeconomics sees only individual trees, not seeing the forest behind them, while macroeconomics does not distinguish individual trees behind the forest. Or, in other words, macroeconomics studies the factors that determine the size of the "social pie", while microeconomics is interested in its composition and distribution.
Of course, there is no Chinese wall or iron curtain between microeconomic and macroeconomic processes. Macroeconomic processes are largely initiated by the decisions of individual economic agents, and these decisions, in turn, are made in a certain macroeconomic environment and significantly depend on it.
The main research method used by economic theory is the modeling of economic phenomena and processes, i.e. the study of objects of knowledge not directly, but indirectly, through the analysis of some auxiliary objects, which are called models. Unlike many natural and especially technical sciences, economics, as a rule, is dominated by ideal modeling, which is based not on the material analogy of the object of study and the model, but on the analogy of the ideal, conceivable. Ideal modeling can be divided into two classes: sign and intuitive.
In economic theory, sign modeling is usually used, in which models are sign formations, usually formulas and graphs. At the same time, sign formations and their elements are specified together with the rules by which one can operate with them. Note that sign models also include words and sentences in some natural (for example, Russian or Chinese) or artificial language.
Economic models must, in principle, meet a number of requirements: the content and realism of the accepted premises and assumptions, predictive ability, the possibility of information support and verification, generality, and a number of others. There is no consensus among economists about which of these requirements is "more important." Some consider the main requirement that the model must satisfy is its predictive ability, while others see the reality of the assumptions made and the ability to explain the behavior of economic agents through the model as such a criterion. Most associate the requirements for the model with the specific purpose for which it is intended. Predictive power is important for models that aim to predict the effects of certain economic parameters on others (for example, the impact of taxes on sales of a product). Realistic assumptions and explanatory power are important for models whose purpose is to explain the behavior of economic agents.
Graphical models have an explanatory ability to a greater extent. The advantage of "pictures" is their compactness, clarity, easy visibility of all relationships between variables. But they also have a disadvantage. Easy-to-read "pictures" are two-dimensional, while three-dimensional ones are no longer so easy to read, and multi-dimensional "pictures" do not exist at all. This limits to some extent the explanatory power of graphical models in economic theory.
Two types of models are used in microeconomics: optimization and equilibrium. When studying the behavior of individual economic agents, optimization models are used. Therefore, the basic working concepts here are of a marginal nature: marginal utility, marginal product, marginal cost, marginal revenue, etc. This was the basis for calling such a methodology of economic analysis marginalism, and those who use it, marginalists (from the English margin - limit). Both of the latter terms were introduced by the English economist J. Hobson (1858-1940) in the works "Industrial System" (1909) and "Labor and Wealth" (1914) and were disparaging. It persisted for a long time in Russian literature.
The term "margin" owes its penetration into economic theory to two English economists - the little-known T. Chalmers and the last representative of the classical school, John Stuart Mill.
The second type of models - market equilibrium models - is used in the study of relationships between economic agents. It is usually assumed that the system is in equilibrium if the interacting forces are balanced and there are no internal impulses to disturb the balance. Market equilibrium models are a special case of a wider and more general class of models of economic interaction between market agents. They allow us to explore not only equilibrium, but also non-equilibrium states of the economy. However, disequilibrium analysis is not usually included in standard microeconomics courses.
Equilibrium models play such an important role in microeconomic theory for the following reasons. The fact is that individual market participants, individuals (households) and enterprises, can optimize their position only if they know all the prices for the resources they consume and the benefits they offer. However, an individual entity usually cannot have a definite opinion about how he could use his funds at an arbitrarily given price level. In practice, he must confine himself to deciding how much of a certain commodity he could buy or sell with a slight change in its price, but on condition, however, that the prices of all other commodities remain unchanged, for only under such an assumption does the monetary unit have a completely clear meaning.
During periods of high inflation, when the absolute prices of all goods are growing rapidly, but growing to varying degrees, the subjects of market relations lose their understanding of the value of the monetary unit. It would seem that in this situation, the assumption of the state of equilibrium, which is the basis of microeconomic models, loses its meaning. However, it is not. Equilibrium models remain in this case the only tool that allows the analyst to distinguish in the behavior of market entities what is due to changes in the price level, and what is due to changes in their ratios. And in the same way, equilibrium models between aggregate demand and aggregate supply are the basis of macroeconomic analysis of fluctuations in the level of economic activity, employment, and inflation.
Source - Galperin V. M. et al. Microeconomics, Institute "Economic School", St. Petersburg, 2004