ECONS 101

BRANCHES OF ECONOMICS.

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Economics can be grouped into two major groups namely: Micro- Economics and Macro- Economics.

MICRO-ECONOMICS.

Micro- Economics refers to the branch of economics that deals with smaller units/components of the economy. It is the branch of economics that studies the economic actions of individuals, firms and governments. It relates to cost, output, production, pricing and the marketing activities of households, firms and governments. It is the branch of Economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, Microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets (e.g. coffee industry).

Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area.

ADVANTAGES OF MICRO- ECONOMICS:

1.     Better Understanding- Micro- economics helps in the better understanding of the functioning of the various units/components of the economy.

2.     Making of Policies- It also helps us to make and develop better policies that will improve the welfare of the people.

3.     Knowledge of Vibrant Sector- The knowledge of micro- economics enables us to determine the vibrant sector of the economy.

4.     Development of Economic Tools- its study helps us to develop sound economic tools used for interpreting/solving economic problems.

DISADVANTAGES OF MICRO- ECONOMICS:

1.     Unreliability of Data- Data derived from the use of micro-economics are not always reliable for the same components/units.

MACRO- ECONOMICS.

Macro- economics refers to the branch of economics which deals with larger units/components of the economy. It is the study of aggregate, total income of the economy. It deals with large aggregates such as- Income, Inflation etc. Macroeconomic s looks at the big picture (hence "macro"). It focuses on the National Economy as a whole and provides a basic knowledge of how things work in the business world. For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not necessarily a bad thing.

NOTE: Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the Micro and Macro levels.

ADVANTAGES OF MACRO- ECONOMICS:

1.     Full Employment- In Macro- economy, full employment is provided to a larger proportion of the population.

2.     Even Distribution of Income- It 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.

3.     Balance of Payment- It also enables adequate balance of payment in the total economy.

4.     Increase in Gross Domestic Product (G.D.P)- The study of macro- economics has resulted in the increase of the G.D.P leading to economic development.

5.     Stability of Price- Price stability is obtained in macro- economics by minimizing price disturbances in the economy.

DISADVANTAGES OF MACRO- ECONOMICS:

1.     Statistical Difficulties- The study of macro- economics makes statistical data difficult to analyze as a result of the grouping of macro- economic variables.

2.     Negative Grouping of Data- 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:

1.     Pure Economics- This is concerned with the study of the laws and theories derived from the study of economic behaviour.

2.     Applied Economics- This is concerned with the application of the laws and theories in analyzing and solving economic problems.

3.     Mathematical Economics- This is concerned with the collection and analysis of data as well as statistics.

4.     Monetary Economics- This involves the study of money and banking.

5.     Business Economics- This is concerned with the study of trade, business organization and accounting.

6.     Development Economics- This is concerned with the study of economic planning and national economics.

NOTE: Some part of this post was put together with the help of www.investopedia.com.

This brings us to the end of today's session. Hope this was very helpful to you, leave a comment of what you think of this tutorial and of your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.