Microeconomics studies individual economic decision-making and the behavior of individual markets, while macroeconomics analyzes economy-wide phenomena such as inflation, output, and unemployment. Microeconomics focuses on supply and demand, individual firms and consumers, and industries. Macroeconomics examines government policies, national income, GDP, and factors influencing the overall economy. Keynesian macroeconomics proposes that government intervention is needed for markets to reach equilibrium. Real income refers to purchasing power after accounting for inflation.

1. Microeconomics & Macroeconomics
Difference
Dr. Dhiresh Kulshrestha
Associate Professor (Economics)

2. Microeconomics
 Microeconomics refers to that branch of economics which studies economic problems of an individual
person or of an individual firm.
It provides the microscopic view of an individual unit.
For instance: The study of the economic problem faced by an individual when his/her
income falls short of his expenditure or
A similar study of individual firm or producer provides the subject matter of
microeconomics.

3. Microeconomics
• Microeconomics try to find:
How the supply of rice might affect its price?
 Microeconomics studies particular aspects of the market, such as which products are
highly demandable and which are not;
 It means Microeconomics deals with Demand Theory, Supply Theory, Consumer
Theory, Production theory
 It deals with Individual theory/ household Income/ Individual firm or industry

4. 2
• Microeconomics deals with the way house holds consume goods using
money income;
• Individual income for household or firm
• Per capita income

5. Macroeconomics
• Macroeconomics studies overall trends and factors that affect the performance of the market
as a whole.
• Macroeconomics also deals with such concepts as government expenses,
trade policies, exchange rate, inflation, and unemployment.
• Macroeconomics focuses:
How controlling the money supply may affect the country’s economy/ GDP/ National Income?

6. Macroeconomics
• Macroeconomics pertains to the overall aspects of the economy,
• Most nations have macroeconomics aspects in place and the success of their
economy depends on the success of their macroeconomic programs and
policies.
• For Example: National Policies, Five year plans, Economics Reforms for
Economic revival of Indian Economy

7. Keynesian Macroeconomics
• It is proposed that demand and supply does not reach equilibrium
automatically, it requires government intervention.
• The Government policies play the vital role to development of economy.

8. Circulation in Macroeconomics

9. Real Income
• Real income refers to the income of an individual or group after taking into consideration
the effects of inflation on purchasing power.
• For example:
• If you receive a 2% salary increase over the previous year and inflation for the year is
1%, then your real income only increases by 1%.
• Conversely, if you receive a 2% raise in salary and inflation is at 3%, then your real
income shrinks by 1%.