In his book The Foundations of Macroeconomics, Thomas Sargent describes the two main schools of economic thought as macro and micro economics. Each has a very different view of the world in which we live in, and each has very different methods of reaching its conclusions. In this brief article I would like to briefly discuss what these schools are, and what they have in common.
To begin with, let us consider what macroeconomics is all about. It is a branch of economics that aims to provide a comprehensive overview of all aspects of the economy. It is interested in the behavior of the economy and all of its components such as finance, production, distribution and employment. It is not a branch of macroeconomics that deals with individual preferences or consumer behavior. In fact, it is not an economics at all! It does not attempt to provide answers to any of the pressing questions that have plagued all other economic branches. Rather, it is a comprehensive review of the whole of the economy, attempting to answer questions that have not been answered before by either theoretical economics or empirical economics.
Microeconomics, on the other hand, is a branch of economics that is concerned with the behavior of individuals within the economy. It is more concerned with the individual person who uses the market place to buy and sell goods and services. This is a relatively new branch of economics that is beginning to gain a good reputation in many circles, especially in the business world. As such, it has the opportunity to bring in fresh ideas and approaches for many individuals.
Many different schools of thought are involved in this topic. These schools have developed their own unique theories about how the economy operates and what are the causes of the fluctuations in the market. The most popular among these are monetarism, the demand theory, and the equilibrium theory. All of these theories have their strengths and weaknesses. A balanced combination of these theories can lead to a successful strategy for all of the major aspects of the economy. However, the best approach to any of these is to have both macro and microeconomics done together.
Many of the major contributors to the development of macro theory and the founding of macroeconomics were from France, England and the United States. John Stuart Mill was the first to use the concepts of equilibrium and price determination to develop these theories. Milton Friedman developed the theory of supply and demand. A number of other important contributors such as Arthur Pigou and W. Johnson have also made contributions to these theories. A great deal of research was done in this area that led to the formulation of the modern monetary policies that we see today. The most recent development that has made a tremendous impact on this area was the introduction of the federal reserve by the United States.
Microeconomics was the first of the two to be written and it is still considered to be the most popular today. There is a lot of controversy surrounding the subject, as there are both supporters and critics of its methodology and theories. However, it is one of the few fields where there is no disagreement about the approach of the discipline. It has been around for a long time and continues to be the focus of much research and debate.
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