Question

Micro and macro economy and there merits and demerits

Answer 1

merits of Micro

1)Micro economics is useful in making predictions based on conditions.eg demand forecasting depends on the micro economic principles of demand.

2) Micro economics uses simple models to understand actual economic phenomenon.

3) It explains and analysis how a country can gain from international trade.

Demerits of micro

1) Micro economics is based on unrealistic assumptions, especially in case of full employment assumption which does not exist practically.

2) Micro economics is based on the information dealing with individual behaviour, individual customers. Hence, it is difficult to get correct information

3)It assumes that all other things being equal (same) but actually it is not so.

Demerits of macro

1) Macro Economics is concerned more with the variables affecting the whole economy. It does not concern with the actions of individual consumers, individual producers etc.

2) It studies various economic phenomena with the help of statistical and conceptual methods. The investigators face difficulties in following these methods.

3) Indiscriminate use of Macro Economics may mislead the economists in analyzing various economic problems.

Merits of macro

1) Macroeconomics is highly useful for understanding the various economic. policies of a country.

) Macroeconomics is highly useful for understanding the various economic. policies of a country.2) It provides rich information regarding the working of the economy. It helps us to estimate the economic variables relating to the total income, total output, total employment etc.

) Macroeconomics is highly useful for understanding the various economic. policies of a country.2) It provides rich information regarding the working of the economy. It helps us to estimate the economic variables relating to the total income, total output, total employment etc. 3) Macroeconomics helps us to review the overall performance of the economy in different spheres .

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Answer 2

Answer:

Microeconomics:

Merits:

• Formulate economic policies to promote the welfare of the masses.

• Explain the functions of a free-market economy and explains how a centralized economy will fail.

Demerits:

• It can not explain the trade cycle.

• Assume full employment in the free-market economy but fails to explain involuntary unemployment and underutilization in depression.

Macroeconomics:

Merits:

• Macroeconomics takes a top-down approach to analyze economics.

• It looks economics with the wide phenomenon of GDP.

Demerits:

• Individual welfare which is the main aim of the economy is ignored in Macroeconomics.

• No proper basis for cost calculation.