Macroeconomics is a branch of economics that studies the macroeconomic effects that are brought about by the macroeconomic forces that affect the macroeconomy. It can be applied on an interdependent macroeconomic system, which means that the macroeconomic policies have a strong impact on other areas of the economy. One such example is the case when two major macroeconomic policies are introduced. This will cause a negative impact on other aspects of the economy and lead to economic instability in the future.
Microeconomics deals with the microeconomic factors that determine economic development. These include the determinants of prices and wages, the level of business activity, the distribution of income, and other factors.
There are many models in economic theory. They all have different definitions of macroeconomic forces and they have different implications for the economic development. Most of the theories assume that prices and wages are determined by the demand and supply of goods. There are also theories that assume that money, production, and transactions to determine prices and wages.
Microeconomics deals with the determinants of prices and wages. This includes the effects of demand and supply of labor and capital on wages, and the effects of the external conditions on price and wage rates. The determinants of demand and supply include: changes in technology; changes in consumer preferences for goods and services; changes in the structure of production; changes in the distribution of income; and external events such as trade barriers, financial crises, and crises in fiscal policies. Other macroeconomic forces that have a direct effect on these determinants of demand and supply are political and international events.
Microeconomics is also considered as a complementary approach to macroeconomics because it analyzes the development of the economy based on individual decisions. This implies that it is not a static analysis. On the contrary, this study considers real-life situations and considers the decision of an individual or group of individuals as being the determining factor in the development of the economy.
In short, macroeconomics is the study of the overall development of the economy. Microeconomics studies the development of the economy from the perspective of an individual or group of individuals.
Micro-economic theory can be broadly classified into two forms. There are models of microeconomics, which are based on the theory of consumer demand; models of microeconomics which are based on the theory of price determination; and models of microeconomics which are based on the theory of business cycles. Each of these forms has its own merits and demerits. Models of demand and prices in models of price determination models of production models of business cycles can help a person understand what he needs to do in order to successfully develop the economy.
To understand the theory of microeconomics, one must first understand that microeconomics is only part of the complete theory of economics. Microeconomics can be compared to that aspect of economics, which is concerned with the micro changes and developments in the structure of production.
Both macro and micro economic theories cannot be proved right or wrong. They merely provide their own facts. Their main role is to explain the different ways in which the economic structure works.