Economics:
Economics is the study of how the little available resources can be used to satisfy wants that are many, since wants are many on the other hand resources available to satisfy them are limited in supply, there is need for one to choose among the wants and make a decision of what the few resources to satisfy first leaving the rest. In economics, factor like inflation and deflation, marker prices, interest rates, exchange rates in the market are studied. Economics has been divided into two major subdivision; microeconomics and macroeconomics.
The word microeconomics is a combination of two words; micro and economics. Micro is a Greek word meaning small, microeconomics is therefore the study of behavior of single aspect of economy that is involved in decision making process; in most cases single entities which make their own decisions. It also involves the study of the effects of decisions made in the general economic environment, (Blaug, 2007).
Macroeconomics is also a combination of two simple words to form a compound word. Macro which is a Greek word meaning large and economics which is a study of how a society make choices in trying to satisfy human wants in the environment where there is shortages of supply of resources. Blaug, (2007) tells us that macroeconomics is the study how the larger society distributes the few available resources making sure that they optimize satisfaction of human wants with the limited supply of resources. It includes the study of more aggregated aspects of the economy which include; employment and unemployment, consumer consumption, investments, trade of goods and services, input, output and expenditure. Macroeconomics studies the complex society that is made up of many individuals, organization and businesses. It looks at the integrated society and effects of the small individual groups in the national economy and the other factor like unemployment.
As microeconomics deals with the study of the single units of the economy like the household and firms and how the decisions they make affect them like one decides to be employed or not and how being employed or going own with education will affect them, (Bruzda, 2011). Macroeconomics on the hand looks at the general economy of nation for example compares employed population with the unemployed population of a whole country. Microeconomics conceders the building blocks of the economy for example looks it looks at the general firms in an economy and how they reward employees and examines to know why they pay that amount what factors of the economy determine the amount of money paid in a year to employees in a nation as a whole. Microeconomics looks at the market local prizes and their effects on the economy for example they try to understand the why a firm will sell a product at a given amount and macroeconomics is concerned with the market prices in the general economy as a whole. Microeconomics looks at the flow of economic resources distribution and movement from the producer to the consumer for example what policies should be adopted by a government so that the poor can access college and university education. Macroeconomics is concerned with the improving the economy of the country as a whole. Microeconomics looks at general growth of firms for example increasing branches whereas macroeconomics looks at international trade between a nation and others.
Employment is an example of a phenomenon in the macroeconomics. It is a major contributing factor in the economic growth and development. High unemployment rates will mean low productivity in a country and therefore low output. Effect of unemployment in an economy is devastating on economic growth, (Samuelson and Nordhaus, 2004)
Examples of microeconomic factors include individual decision making and how the impact of the decision on individual entity for example how much will it cost a firm to start producing a new product and how will the new product affect the firm. Example, one has to look at the raw materials required to produce the product and what is required as a trade off of the raw materials. After examining the cost of production the weighs if they will produce the commodity or no based on the cost and projected benefits of the commodity, (Samuelson and Nordhaus, 2004).
Macroeconomics on the other hand looks at the whole economy, evaluates the interrelations of the sum total of the components of the economy. They also come down and critically evaluate individual units’ performance, (Samuelson and Nordhaus, 2004). For example what is the positive or negative magnitude of prices in an economy as compared to the past subsequent years and read the general trend and behavior in the economy.
In our daily lives we made micro economics decisions, personally when I was coming to school; I was involved in making some microeconomic decision. I was faced by the challenge of what to buy and what to forego in the list of items that I had against the small amount of money I was supposed to use. I needed some food stuff, personal items, more clothes, more books and pocket money, I had to make decision of choosing what I felt was so important leaving the rest.
The factors I considered in my decision making were: the amount of money I had to spent, the price of goods and the quality of goods I needed and extend of need for goods I needed. I had to filter my list to make it shorter; I removed the goods I felt were less necessary and go for the quality that was just enough to meet my needs.
References
Blaug, M. (2007). The Social Sciences: Economics, The New Encyclopedia Britannica, v. 27, pp. 347–49. Chicago.
Bruzda, J. (2011). On Some Problems in Discrete Wavelet Analysis of Bivariate Spectra with an Application to Business Cycle Synchronization in the Euro Zone. Economics Discussion Papers, No 2011-5. From:
Samuelson, P.A., and Nordhaus, W. D. (2004). Economics. The Process of Economic Growth. McGraw: Hill from:
