This document provides an introduction to macroeconomics and microeconomics. It defines the key differences between the two branches of economics. Macroeconomics deals with aggregates of the entire economy, such as national income and output, while microeconomics focuses on individual economic units and markets. The document uses examples and diagrams to illustrate macroeconomic concepts like the circular flow of income and expenditures between economic sectors. It also provides microeconomic examples related to price determination and resource allocation at the firm level. Students are then asked questions to classify topics as either macroeconomic or microeconomic in nature. The final sections assign students to discuss the basic problems of society and how economics helps address constraints and limitations.

1. INTRODUCTION TO APPLIED ECONOMICS PART III
RABIE C. PASTURAN

2. OBJECTIVES;
1.Classify Macroeconomics versus Microeconomics.
2.Differentiate Macroeconomics and Microeconomics.
3.Demonstrate critical thinking in differentiating problems
related to macroeconomics and microeconomics.
4.Practice responsible consumerism.

3. PICTURE ANALYSIS: FORMATIVE ASSESSMENT

4. WHAT ARE THE TWO BRANCHES OF ECONOMICS?
MACROECONOMICS MICROECONOMICS
The prefix “micro” is derived from the
Greek word “mikros” meaning small.
From the Greek prefix “makro”
meaning large.

5. MACROECONOMICS
• It deals with the averages and aggregates of the entire economy
such as NATIONAL INCOME, AGGREGATE OUTPUT, AGGREGATE
SAVINGS, etc,
• It has a wide scope and interprets the economy of a country as a
whole.
• It is also known as the INCOME THEORY because it explains the
changing levels of national income of an economy during a period of
time.
• It deals the circular flow of income and expenditures between
different sectors of the economy.
• It helps in developing policies appropriate resource distribution at
economy level such as inflation, unemployment level, etc.

6. MICROECONOMICS
• It deals with the decision making of single economic variables such
as demand, price, consumer, etc.
• It is narrow in scope and interprets the small constituents of the
entire economy.
• It is also known as the PRICE THEORY because it explains the
process of economic resources allocation on the foundation of
relative prices of several goods and services.
• It deals with the flow of various factors of production from a single
owner to a single user of those resources.
• It helps in developing policies appropriate resource distribution at
firm level.

7. LET’S FOCUS.
Microeconomics Macroeconomics
Subjects Economic behavior Economic behavior
Levels of Analysis Individual Units Entire Economy
Agents Individual Aggregate
(sectors of economy)
Markets Particular goods and
services
Composite
Prices Relative Absolute
Market Adjustment Only via changes in
prices
In the short run via
changes in quantities.

8. LET’S FIND OUT
Classify the following topics: Write MIC if it falls under Microeconomics; MAC if it falls under Macroeconomics.
1. The inflation rate in the Philippine budget in the last quarter of 2013 was 4.8%.
2. A ₱340-billion deficit in the Philippine budget is expected in the year 2015.
3. Prices of Toyota vehicles are predicted to go up in December.
4. Garlic prices in the past months have risen because producers hoarded their supplies in
their business.
5. Unemployment rate has dropped because of the increase in the number of OFWs.
6. In the past years, Coca-Cola was named the fastest selling product in the market.
7. Rental on land could not be increased by landowners because of the Rent Control Law.
8. Prices od apples and grapes tend to increase during the Christmas season.
9. The Philippine economy grew at a rate of 5.8% in 2013.
10.Philippine congress passed the Value Added Tax Law to strengthen the Philippine tax
system.

9. ASSIGNMENT
1.What are the basic problems of society?
2.Discuss its natures and how it helps
cope up with constraints and limitations?