After the great depresion of the 1930s , the discipline of economics split into two , namely , microeconomics and macroeconomics . Ragnar Frish , a Norwegian economist and jan Tinbergen , a Dutch economist were the first to introduce the words micro-dynamics and macro-dynamics in 1933 and these were later known as microeconomics and macroeconomics .
The terms " Microeconomis" and " Macroeconomics " are derived from the Greek words "micro" and "macro" , where "micro" means small and "macro" mean large .
Mircoeconomics
- Microeconomics studies individual economic unit s in detail such as a household , a firm and a goverment . As the word " micro" means looking closer into small units , microeconomics provides an outline for choices and decision making of an individual , a business and the public at large .
Microeconomic concepts can be applied to our daily lives . individuals face questions like : What do I want for breakfast ? Shall I buy a DVD player or a computer ? where should I go for holidays ? Firms face questions like : Shall we produce rice or compact discs ? How many labourers should we employ ? Shall we use more machines or labour ? A government faces questions like : Shall we allocate a budget for schools or clinics ?
Macroeconomics
- Macroeconomics studies the aggregate behaviour of the entire economy . We study the gorss domestic product , the national income , inflation , feflation , unemployment , public finance , the trade cycle , international trade and others .
Some examples are : What is the unemployment rate in Malaysia ? What cause a high inflation ? Why did Bank Negara Malaysia cut interest rates by 2 percent ?
Microeconomics
- The study of individuals parts of the economy such as public choices , business choices and personal choices .
Macroeconomic
- The study of the economic system as a whole such as the national income , the trade cycle , the unemployment rate , inflation and general price levels .
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