What are the importance of microeconomics and macroeconomics

The term ‘macro’ has been derived from the Greek word ‘makros’ which means ‘large’. So, macroeconomics deals with overall performance of the economy. It is concerned with study of problems of the economy like inflation, unemployment, poverty, etc.

Macroeconomics is that part of economic theory which studies the behaviour of aggregates of the economy as a whole. For example, National income, aggregate output, aggregate consumption, etc. Its main tools are Aggregate Demand and Aggregate Supply. Adam Smith is considered to be the founder of the field of microeconomics. The term ‘micro’ has been derived from Greek word ‘mikros’ which means ‘small’. Microeconomics deals with analysis of behaviour and economic actions of small and individual units of the economy, like a particular consumer, a firm or a small group of individual units. The concept of microeconomics is very important as it supplies the foundation for most of our understanding of the functioning of an economy. Microeconomics is that part of economic theory, which studies the behaviour of individual units of an economy. For example, Individual income, individual output, price of a commodity, etc. Its main tools are Demand and Supply.