Hi, welcome to this blog on the branches of economics, the advantages and disadvantages economics.
Table Of Contents
- Branches of economics
- Micro and macro-economics definition
- Advantages and disadvantages of micro-economics.
- Advantages and disadvantages of macro economics
BRANCHES OF ECONOMICS
Economics can be grouped into two major divisions. These are micro-economics and Macro-economics.
Micro-economics
Definition: Micro-economics refers to the branches of economics which deal with smaller units or components of the economy. It is concerned with the analysis of the basic decision making component of households, individuals, firms and government. It relates to cost, output, production, pricing and marketing activities of households, firms and government.
Advantages of Micro-economics
- Better understanding: Micro-economics helps in the better understanding of the functioning of the various units of components of the economy.
- Making of policies: Another advantages of Micro-economics is that It also enables us to make and develop better policies that will improve the welfare of the people.
- knowledge of vibrant sector: The knowledge of Micro-economics enables us to determine the vibrant sector of the economy.
- Development of economic tool: The study of Micro-economics helps us to develop sound economic tools used for interpreting or solving economic problems.
Disadvantages of Micro-economics
- Unreliability of Data: Data derived from the use of Micro-economic principles are not always reliable for the same components or units.
MACRO-ECONOMICS
Definition: Macro-economics refers to the Branches of Economics which deals with larger units or aggregate of the economy. Macro-economics relates to large aggregates such as national income, inflation, unemployment and balance of payment. In summary, macro-economics deals with the broad aggregates in the economy.
Advantages of Macro-economics
- Even distribution of income: The study of Macro-economics helps to make sure that the wealth of the nation is not concentrated in the hands of few individuals or to certain sectors of the economy.
- Full employment: In a macro-economy, full employment is provided to large proportion of the population.
- Provision of Goods and Services: Another advantages of Macro-economics is that Goods and services are generally provided for the people in a macro economic system.
- Balance of Payment: Macro-economics also ensures adequate balance of payment in the total economy.
- Monetary Policies: Monetary policies are being completely analysed and comprehended easily through the study of Macro-economics .
- Increase in gross domestic product (GDP): The study of Macro-economics has results in the increase in gross domestic product (GDP) leading to economic development.
- Stability of Price: Price stability is obtained in Macro-economics by minimizing price disturbances in the economy.
- Deficiency in aggregate Demand: The causes of deficiency in aggregate demand are made known through the study of Macro-economics.
Disadvantages of Macro-economics
- Statistical difficulties: The study of Macro-economics makes statistical data difficult to analyse as a result of the grouping of Macro-economics variables.
- Negative grouping of Data: Another disadvantages of Macro-economics is that In the analysis of Macro-economics, data are being negatively grouped to be the same without considering the particular nature of each component of the economy.
Other Branches of Economics
- Pure Economics: This is concerned with the study of the laws and theories derived from the study of economic behaviour.
- Applied Economics: This is concerned with the application of the laws and theories in analyzing and solving economic problems.
- Mathematical economics: This is concerned with the collection and analysis of data as well as statistics.
- Monetary Economics: This involves the study of money and banking.
- Business Economics: Business economics is concerned with the study of trade, business organization and accounting.
- Development Economics: This is concerned with the study of economic planning and national economics.
Revision Questions
- What are the two branches of economics
- Define micro economics and macro economics
- List the advantages and disadvantages of micro economics.
- What are the advantages and disadvantages of macro-economics?