Thursday, May 26, 2011

Macro and Microeconomic Definition

Macro and Micro economics economy are the two main branches of the economy. Microeconomics is the branch that focuses on how individuals, households, and organizations make their decision to distribute limited resources, usually in the market who saw the trade in goods or services. Micro-economic study how these decisions affect the general supply and demand for commodities and services. As we know, the supply is one factor that determines the price, which in turn, determine the supply and demand for goods and services. Micro economics is also commonly referred to as the view "bottom-up economy" (bottom to top), or how people deal with money, time and resources available.

Microeconomics focuses on supply and demand and other forces that determine price levels seen in the economy. For example, microeconomics would look at how a specific company could maximize production and capacity so that it can lower prices and better compete in its industry.
And macroeconomics is a branch of learning "total economic activity, dealing with problems of growth, inflation, unemployment, national economic policies that come from government initiatives (such as changes in tax rates, etc.). For example, macroeconomics would look at how the increase / decrease in net exports will affect the amount of foreign exchange, or how a nation's GDP will be affected by the unemployment rate.

It is quite clear that the management of large-scale global organization should always take both microeconomic and macroeconomic aspects into consideration before they decide their management policies. Macroeconomic will pretty much depend on local governments which will vary from one country to another country and in some cases even one country to another. This is due to various forms of government and policies in different parts of the world. Then this will be the main focus areas for the smooth running of a global organization. Microeconomics on the other hand, depending on the particular behavior of people in various parts of the world. Therefore, for a global organization, it is important to conduct a thorough study of these two aspects to consider before implementing a policy area of ​​management.

While both studies show the economy is seen as different, they are actually interdependent and complement each other. Because there are issues related between the two fields. For example, increased inflation (macro effect) would cause the price of raw materials to increase for the company and in turn affect the final product price charged to the public.

The bottom line is that microeconomics takes a bottom-up (bottom to top) to analyze the economy, while macroeconomics takes a top-down approach (top down). Whatever it is, both micro and macroeconomic fundamentals, both to manage any professional financial institution in order to understand how companies operate and earn income. Thus, the economy can be managed properly and sustainably.

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