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Microeconomics and macroeconomics are two branches of economics that study different aspects of the economy:
Microeconomics
Focuses on how individuals, households, and businesses make decisions about the allocation of resources and prices of goods and services. It also considers taxes, regulations, and government legislation.
Macroeconomics
Focuses on how the economy works as a whole, including how the decisions of countries and governments impact the economy. It analyzes entire industries and economies, rather than individuals or specific companies.
Microeconomics and macroeconomics complement each other and are both important areas of study. For example, a hedge fund might consider a country’s monetary policy, which is a macroeconomic factor, when making investment decisions. The fund might short the market if the policy leads to a slowdown in the economy.
Macroeconomics, like a discrete part of economics, surfaced after the British economist, John Maynard Keynes issued and published his book, ‘The General Theory of Employment, Interest and Money in 1936. The ascendant thinking in economics before Keynes was that all the workers who are willing to work would find employment and all the plants (factories) will be functioning at their comprehensive capacity. This school of notion is known as the classical tradition.
Microeconomics is a branch of economics that contemplates the attributes of decision makers within the economy, such as households, individuals, and enterprises. The term ‘firm’ is generally used to refer to all sorts of trade. Microeconomics is distinct from the study of macroeconomics, which considers the economy as an entity.
Whilst these two studies of the subject economics appear to look different, they complement each other and are interdependent, since there are several overlapping issues between these two segments. For instance, raised inflation (macro effect) would be the reason for the increase in the price of raw materials.