Micro and Macro-Economics
The subject-matter of Economics has been divided into two parts – Micro-Economics arid Macro Economics. In Micro-Economics we study the economic behaviour of an individual, Firm or industry in the national economy. It is thus a study of a particular unit rather than all the units combined. We mainly study the following in Micro-Economics
(i) product pricing;
(ii) consumer behaviour;
(iii) factor pricing;
(iv) economic conditions of a section of the people;
(v) study of firms; and
(vi) location of a industry.
Thus, when we are studying how a producer fixes the prices of his products, we are studying Micro-Economics. Similarly, when we are studying why an industry is located at a particular place, we are studying Micro-Economics.
In Macro-Economics, we study the economic behaviour of the large aggregates such as the overall conditions of the economy such as total production, total consumption, total saving and total investment in it. It is the study of overall economic phenomena as a whole rather than its individual parts. It includes
(i) national income and output;
(ii) general price level;
(iii) balance of trade and payments;
(iv) external value of money;
(v) saving and investment; and
(vi) employment and economic growth.
Thus, when we study why we continue to have balance of payments deficits, or why the value of rupee vis-à-vis dollar is falling or why saving rates are high or low in a particular country