Different Branches of Economics – In Layman Terms

Imagine a giant family picnic! Economics is like figuring out how everyone gets enough food (resources) to enjoy themselves. There are two ways to look at it:

  • Microeconomics: Focuses on individuals and small groups, like you deciding on a sandwich (consumption) or your friend bargaining with a vendor for a kite (prices).

  • Macroeconomics: Looks at the entire picnic basket, like how much food everyone brought (total production) or if there’s enough for everyone to eat (economic growth).

So, economics helps us understand how individuals, businesses, and countries make choices about what to produce, how to distribute it, and how much to consume!

Microeconomic : Lets go in Depth Analysis 

1. What is Microeconomic – In-depth Analysis

Imagine a bustling Indian bazaar! Microeconomics is like zooming in on individual stalls and the people interacting there. Here’s how it works:

  • Decision Making: A shopkeeper decides how much sugar to buy for sweets (resource allocation). A family chooses between buying mangoes or apples (consumption). These are microeconomic decisions.

  • Prices and Values: Why is saffron more expensive than turmeric? Microeconomics explains how factors like rarity and demand influence prices.

  • Markets and Exchange: Bargaining for that perfect silk saree? Understanding how buyers and sellers interact to determine the final price is key in microeconomics.

Here are some additional examples:

  • A farmer decides how much fertilizer to use and how much to sell his harvest for (production and pricing).

  • A young entrepreneur chooses between opening a chai stall or a phone repair shop (resource allocation).

  • You compare prices at different grocery stores before buying your weekly groceries (consumer behavior).

2. Whodunnit? Tracing the Microeconomics Roots

  • Economists today tend to specialize in either macro or microeconomics. But how did this distinction come about?
  • The credit for separating these two branches goes to a Norwegian economist named Ragnar Frisch.
  • Although he didn’t use the exact term “microeconomics,” Frisch was the first to differentiate between what we now call “micro” and “macro” analysis in 1933. He used terms like “micro-dynamic” and “macro-dynamic” to describe these approaches.

From “Micro-Dynamic” to Microeconomics

  • The term “microeconomics” itself didn’t appear until 1941. That’s when another economist, Pieter de Wolff, is credited with using it for the first time in a published work. He essentially took Frisch’s concept of “micro-dynamic” and shortened it to the more user-friendly “microeconomics.”
  • So, while Frisch gets the nod for the initial distinction, de Wolff gets the credit for coining the official term!

3. Microeconomics: A Peek into Individual Choices and Market Dynamics

Microeconomics goes beyond just buying and selling. It dives deep into the decision-making processes of individuals (consumers) and businesses (firms), and how these choices shape the markets we see around us. Some key concepts with examples:

1.Utility and Consumer Choice: Finding Happiness in Every Rupee!

  • Imagine you’re at a bustling street market. Microeconomics asks: What gives you the most satisfaction (utility) for your money?

  • You might choose a juicy mango over an apple because you love its taste more (preferences). This reflects the “law of diminishing marginal utility” – the more you consume something, the less additional satisfaction you get from each unit.

  • Now, consider your budget. You can’t buy everything! Microeconomics uses tools like indifference curves (showing combinations of goods that give you equal satisfaction) and budget lines (representing your spending limit) to explain how you make choices based on both preferences and affordability.

2.Production and Costs: Making the Samosas, Counting the Pennies

  • Let’s shift to a local samosa stall. Microeconomics analyzes how the owner decides how many samosas to make (production) and how much to spend on ingredients and oil (costs).

  • The “production function” shows the relationship between inputs (flour, potatoes) and outputs (samosas). The owner wants to optimize production – make enough samosas to meet demand without wasting resources.

  • Microeconomics also explores cost structures. Fixed costs (rent, equipment) don’t change with production, while variable costs (ingredients, labor) increase as the owner makes more samosas. Understanding these costs helps him price his samosas competitively.

3.Perfect Competition: The Bustling Bazaar

  • Think of a vibrant Indian bazaar with countless shops selling similar clothes. This is close to a “perfect competition” market structure in microeconomics.

  • Here, many small sellers offer identical products (like kurtas) and have no control over prices. Prices are determined by supply and demand, ensuring efficiency and fair competition.

  • In a perfect competition, no single seller can significantly influence the market. This ideal scenario might not exist perfectly, but it helps us understand how competitive markets function.

4.Monopoly and Market Power: The Lone Tea Stall

  • Now, imagine a remote village with only one tea stall. This is a monopoly – a single seller with significant market power.

  • Microeconomics analyzes how monopolies like this tea stall can set higher prices than in a competitive market.

  • While the owner enjoys higher profits, it can impact consumer welfare as they have limited choices and might have to pay more for their chai.

Understanding market power is crucial for ensuring fairness and encouraging competition in the Indian economy.

Remember: These are just a few key concepts in microeconomics. As you delve deeper, you’ll discover even more ways individual decisions and market dynamics shape the economic landscape of India!

4. Microeconomics: The Unsung Hero of Understanding Our Economic World

  • Microeconomics might not grab the headlines as often as its flashier cousin, macroeconomics, but it plays a critical role in our everyday lives.
  • It’s the foundation upon which a large portion of modern economics is built, providing invaluable insights into individual and firm decision-making, market behavior, and resource allocation. Here’s why microeconomics is so significant:

1.Decoding Consumer Choices: The Power of Preferences

  • Have you ever agonized over whether to buy that fancy new phone or stick with your current one? Microeconomics sheds light on this internal struggle through concepts like utility theory. It helps us understand how consumers derive satisfaction (utility) from goods and services.
  • Indifference curves depict combinations of goods that provide the same level of satisfaction, allowing you to visualize your trade-offs.
  • Finally, budget constraints remind you that resources are limited, forcing you to make choices based on your income. By analyzing these factors, microeconomics helps us predict how consumers will react to price changes, new products, and advertising, ultimately influencing business strategies and market trends.

2.The Market Dance: Supply, Demand, and Finding Equilibrium

  • Imagine a bustling marketplace. How are prices determined? Microeconomics answers this question through the power of demand and supply analysis.
  • Demand represents how much of a good or service consumers are willing and able to buy at different prices. Supply represents how much producers are willing to sell at different prices.
  • The magic happens at the equilibrium point, where the quantity demanded and quantity supplied are equal. This creates a stable price point where neither buyers nor sellers feel pressured to change their behavior.
  • Microeconomics also explores the concept of elasticity, which measures how responsive consumers are to price changes. This helps businesses understand how much they can adjust prices without significantly impacting sales.

3.Behind the Scenes: How Firms Make Decisions

  • Microeconomics doesn’t just focus on consumers; it also delves into the world of producers. By studying production functions, we understand how firms transform inputs (raw materials, labor) into outputs (finished products).
  • Analyzing cost structures helps businesses identify and manage fixed costs (rent, salaries) and variable costs (materials, energy) to optimize production and maximize profits.
  • Furthermore, microeconomics explores different market structures like perfect competition (numerous small firms) and monopoly (single dominant firm).
  • By understanding how these structures influence pricing, output, and competition, policymakers can design regulations that promote fairness and efficiency in the market.

4.Making the Most of What We Have: Efficient Resource Allocation

  • Imagine a world with unlimited resources. Microeconomics wouldn’t be quite as fascinating! In reality, resources are scarce, and microeconomics helps us use them efficiently.
  • By analyzing costs, benefits, and alternative uses of resources, microeconomics guides individuals, firms, and even governments in making optimal choices.
  • This ensures that resources are directed towards activities that generate the most value for society.

5.A Toolbox for Policymakers: Promoting Growth and Fairness

  • Microeconomics isn’t just about theoretical concepts; it has real-world applications.
  • Policymakers rely on the insights gleaned from microeconomics to design effective policies that promote economic growth, consumer welfare, and a fair competitive environment.
  • For example, understanding how taxes affect consumer choices and producer decisions helps policymakers design tax structures that encourage economic activity. Similarly, microeconomics helps analyze the impact of regulations on different market players, ensuring that regulations promote competition and prevent monopolies from exploiting consumers.

5. Microeconomics in Action: From Bikes and Cars to Public Policy

Microeconomics isn’t just about abstract theories; it has real-world applications that impact our everyday lives. Let’s explore how microeconomics is used in India, specifically regarding consumer behavior, market interventions, and labor markets, using the examples of bikes and cars.

1.Consumer Behavior and Public Policy: Understanding the Two-Wheeler vs. Four-Wheeler Choice

  • Imagine you’re considering buying a vehicle. Microeconomics helps policymakers understand the factors influencing your decision between a fuel-efficient bike and a comfortable car.

  • Policymakers use microeconomic analysis to:

    • Predict the impact of fuel price changes: If petrol prices rise, a microeconomic analysis would predict a shift in consumer preference towards more fuel-efficient bikes. This information helps the government design policies like fuel subsidies for specific demographics or promoting public transport to mitigate the impact on consumers.

    • Analyze the effectiveness of fuel efficiency regulations: Microeconomics can assess the impact of stricter emission standards on car prices. This knowledge helps policymakers balance environmental concerns with affordability for consumers.

2.Market Interventions and Externalities: Dealing with Traffic Congestion

  • Traffic congestion in Indian cities is a classic example of an externality – a cost imposed on a third party by an economic activity. Here’s how microeconomics helps:

    • Microeconomic analysis can estimate the economic cost of congestion: This cost includes wasted fuel, lost productivity due to travel time, and environmental impact.

    • Policymakers can then explore microeconomic tools to address congestion: These tools could include congestion pricing (charging vehicles entering a crowded area), promoting carpooling, or investing in public transportation infrastructure. All these policies aim to create a more efficient market by internalizing the externality (making drivers pay for the congestion they cause).

3.Labor Markets and Income Inequality: Skilled Mechanics vs. Factory Workers

  • The Indian automobile industry employs a diverse workforce, from skilled mechanics to factory workers. Microeconomics helps analyze these labor markets:

    • Microeconomics can explain wage differences: Mechanics typically earn more than factory workers due to higher skill levels and demand. Understanding this helps policymakers design training programs to improve the skills of factory workers, potentially increasing their wages and reducing income inequality.

    • Microeconomic analysis can also assess the impact of automation: As technology advances, some factory jobs might be replaced by automation. By understanding these potential changes, policymakers can develop programs to retrain workers for new opportunities in the automotive sector or other industries.

These are just a few examples of how microeconomics plays a crucial role in shaping India’s economic landscape. By understanding consumer behavior, addressing market inefficiencies, and analyzing labor markets, microeconomics helps policymakers create a more efficient, equitable, and sustainable economic environment for all.


In Short – Microeconomics

Microeconomics in a Nutshell 

  • Microeconomics zooms in on individual decision-makers like you and me! It analyzes how households (consumers) and firms behave in markets. Unlike macroeconomics, which focuses on the big picture, microeconomics takes a closer look at the forces influencing our everyday decisions.

The Core: Supply & Demand

  • Imagine a marketplace. Microeconomics uses the supply and demand model to explain how prices are set. This model considers factors affecting consumer choices (demand) and producer decisions (supply). By understanding these forces, we can predict how markets function.

Concepts We Explore:

  • Consumer Choices: We all aim to get the most value (utility) for our money. Microeconomics uses concepts like utility curves and budget lines to show how we make choices based on preferences and limitations.
  • Production & Costs: Businesses need to know how to produce efficiently. Microeconomics explores production functions and cost structures to understand how firms minimize costs while maximizing output.
  • Market Structures: Different market structures exist, each impacting decision-making. Perfect competition, with many small firms, is a theoretical model for efficient markets. Monopolies, with a single dominant seller, raise concerns about consumer welfare.

Why is Microeconomics Important?

Microeconomics is the foundation of modern economics! It helps us understand:

  • Consumer behavior: How we make choices considering our wants and budget.
  • Market interactions: How supply and demand determine prices and market equilibrium.
  • Production decisions: How firms operate and make choices to optimize production.
  • Resource allocation: How to efficiently use limited resources.

Microeconomics in Action!

Policymakers use microeconomic principles to:

  • Design policies that benefit consumers and promote competition.
  • Address market failures like externalities (pollution).
  • Understand labor markets and income inequality.

By understanding microeconomics, we gain a deeper understanding of the decisions we make and the markets we participate in every day.

Macroeconomic – In Depth Analysis

1. Macroeconomics in Action: The Big Picture of the Indian Economy

Imagine the Indian economy as a giant pot of curry. Macroeconomics helps us understand the entire pot, not just the individual ingredients (businesses, consumers) or the spices (specific industries). It focuses on how all these elements work together to create the overall flavor (economic performance).

1.Macroeconomic Factors: The Ingredients of the Curry

  • Inflation: Imagine the price of onions, a key ingredient, suddenly increases. This inflation can affect the overall cost of the curry.

  • Price Levels: The general price of a typical Indian meal is a price level. If the cost of most ingredients increases, the price level of the entire curry goes up.

  • Economic Growth Rate: If the Indian economy grows, it’s like adding more vegetables and meat (increased production) to the curry, making it a bigger pot.

  • National Income: This is like the total value of all the ingredients and the cooked curry in our example. If people earn more (higher income), they might buy more elaborate curries.

  • GDP: This is the total value of all the final goods and services produced in India, like the total value of all the curries cooked in the country.

  • Unemployment: If a significant number of people are looking for jobs but can’t find any, it’s like having skilled cooks who aren’t contributing to making curries (economic output).

2.Key Areas of Macroeconomics: Cooking the Perfect Curry

  • Long-Term Growth (Adding More Ingredients): Macroeconomics looks at factors like education, infrastructure, and innovation that can help the Indian economy grow steadily over time. Imagine adding new spices or vegetables to create a more flavorful curry in the future.

  • Business Cycle (The Simmering Pot): Macroeconomics analyzes short-term fluctuations in the economy. Sometimes, the economy might slow down (like the curry simmering on low heat), with lower production and employment. Other times, it might boom (like the curry bubbling vigorously), with high growth and low unemployment. Macroeconomics helps predict and manage these cycles for a stable economy.

By understanding these macroeconomic factors, the Indian government can make informed decisions like setting interest rates, investing in infrastructure, and implementing social welfare programs. These decisions aim to create a healthy economic climate where the “curry” of the Indian economy simmers perfectly, providing prosperity for all.

Remember: Macroeconomics deals with the big picture, while microeconomics focuses on individual decision-making by consumers and businesses. They work together to create a well-functioning economic system.

2. Understanding Macroeconomics in India: From Choices to Growth

Macroeconomics deals with the big picture of the Indian economy, just like a chef overseeing a bustling kitchen. Some key concepts with examples:

1.Capitalist Nation: Freedom of Choice in the Marketplace

India is a Social- capitalist nation, meaning individuals and businesses have more freedom to make economic decisions. Imagine a bustling Indian bazaar:

  • Customer Choice: You have the freedom to choose between different types of mangoes (or any other good or service) based on price, quality, and your taste.

  • Business Ownership: Anyone with the skills and resources can set up a shop to sell mangoes or other products.

  • Limited Government Interference: While the government might set some regulations for food safety, it generally doesn’t control which mangoes are sold or at what price.

  • Market Forces: Supply and demand determine the price of mangoes. If there’s a high demand and fewer mangoes, the price might go up.

2.Investment Expenditure: Growing the Kitchen

Investment expenditure is like buying new equipment (ovens, refrigerators) for the kitchen (economy). It’s the money spent on things that will be used to produce goods and services in the future, not for immediate consumption. Here’s how it helps India grow:

  • New Businesses: A restaurant owner might invest in opening a new branch, creating jobs and increasing the overall production of food.

  • Improved Infrastructure: The government might invest in building new roads, making it easier to transport goods across the country, which can boost economic activity.

  • Technological Advancements: A textile company might invest in new machinery to produce clothes faster and more efficiently.

3.Revenue: The Fuel for the Kitchen

Revenue is the income a business earns from selling goods and services. It’s like the daily sales of a restaurant that keeps the kitchen running. Here’s its connection to India’s economic health:

  • Business Success: Higher revenue for businesses means they can invest more (see point 2), hire more employees, and contribute to overall economic growth.

  • Government Revenue: Businesses pay taxes to the government, which is a major source of income for the government. This revenue is then used to fund public services like education and healthcare, which can further improve the economy.

4.Understanding Revenue and GDP

GDP (Gross Domestic Product) is the total value of all final goods and services produced in a country in a given year. It’s a key indicator of a country’s economic health. Here’s how revenue relates to GDP:

  • Revenue Contribution: The revenue generated by all businesses in India contributes to the overall GDP. Higher revenue from businesses generally means a higher GDP, indicating a growing economy.

By understanding these concepts, we can see how individual choices and business decisions all contribute to the bigger picture of the Indian economy. Just like a well-run kitchen requires coordination between chefs and suppliers, a healthy economy requires a balance between consumer choices, business investments, and government policies.

3.Why Macroeconomics Matters in India: Keeping the Economic Engine Running Smoothly

  • Imagine the Indian economy as a complex machine with many moving parts – businesses, consumers, and the government.
  • Macroeconomics acts like the engineer who oversees this machine, ensuring it runs smoothly and efficiently.
  • Here’s how macroeconomics plays a crucial role in India’s economic well-being:

1.Price Stability: Keeping Inflation in Check

  • Macroeconomics helps control inflation, the constant rise in prices of goods and services. Think of it like keeping the pressure gauge on a cooker within a safe range.
  • If inflation goes too high (pressure cooker hissing!), it can make everyday essentials expensive and hurt people’s savings.
  • Macroeconomics guides the government in taking steps like setting interest rates to ensure prices remain stable.

2.Addressing Major Economic Issues

Macroeconomics helps tackle various economic challenges India faces:

  • Deflation: This is the opposite of inflation, where prices constantly fall. It can be bad for businesses as they earn less, potentially leading to job losses. Macroeconomic policies can help stimulate the economy and prevent deflation.

  • Unemployment: When a significant portion of the workforce is unable to find jobs, it’s a major concern. Macroeconomics helps the government create policies that encourage businesses to invest and create more jobs.

  • Poverty: Macroeconomic policies aim to create a healthy economic environment where more people can find work, earn a decent living, and lift themselves out of poverty.

3.Guiding Businesses and Investors

  • Just like understanding the weather helps farmers plan their crops, macroeconomics helps businesses make informed decisions.
  • By understanding economic trends like inflation and interest rates, businesses can plan their investments, pricing strategies, and hiring plans more effectively.
  • This can lead to better business performance and contribute to overall economic growth.

4.Studying the Role of Government

  • The government plays a crucial role in shaping the Indian economy.
  • Macroeconomics helps analyze how government policies, such as taxation and spending, affect economic growth, inflation, and employment.
  • This knowledge allows the government to make informed decisions for the benefit of the nation.

5.The Global Connection

  • The Indian economy interacts with other economies around the world through trade and international investments.
  • Macroeconomics considers these global factors to understand how events in other countries might impact India’s economic performance.
  • This allows the government to prepare for and react to external economic changes.
  • By understanding these aspects of macroeconomics, we can see how it plays a vital role in ensuring a stable and growing Indian economy.
  • Just like a well-oiled machine, all the parts of the economy need to work together for India to achieve its full economic potential.

4.Gauging the Health of the Indian Economy: Macroeconomic Indicators

  • Imagine the Indian economy as a patient. Macroeconomics acts like a doctor who uses various tools to assess its overall health.
  • These tools are called macroeconomic indicators, and they provide insights into the economy’s growth and stability.
  • Two key areas macroeconomics focuses on, with examples:

1.Economic Growth: The Long-Term Journey

This area looks at factors that influence India’s economic growth over time, just like a doctor monitoring a patient’s weight gain or height increase. Some key indicators to measure this growth include:

  • Gross Domestic Product (GDP): This represents the total value of all goods and services produced in India in a year. Think of it as the patient’s total weight – a higher GDP indicates a larger and potentially stronger economy.

  • Employment Rate: This measures the percentage of the workforce that has jobs. More jobs generally mean more people are earning income, contributing to overall economic growth. Imagine the patient having the energy to work and contribute.

  • Foreign Direct Investment (FDI): This is when foreign companies invest money in India. Higher FDI indicates confidence in the Indian economy and can lead to job creation and technological advancements, similar to a patient receiving vitamins to boost overall health.

2.The Business Cycle: Ups and Downs

The economy, like our health, experiences ups and downs. This area focuses on short-term fluctuations in economic activity, often referred to as the business cycle. Here’s how it’s measured:

  • National Bureau of Economic Research (NBER): This is an independent organization that tracks the business cycle in the US (which can also impact India) using indicators like GDP growth. Imagine the NBER as a specialized doctor who can identify if the patient is experiencing a fever (economic slowdown) or feeling particularly energetic (economic boom).

Understanding these indicators helps policymakers make informed decisions. Just like a doctor prescribes medicine based on a patient’s diagnosis, the government can create policies based on these indicators. For example, if the GDP growth is slow, the government might invest in infrastructure projects to create jobs and stimulate the economy.

5. Beyond Micro and Macro: Exploring Specialized Branches of Economics in India

While macroeconomics looks at the big picture and microeconomics focuses on individual decisions, economics has many branches that delve deeper into specific areas. Let’s explore some of these branches with examples:

  • Behavioral Economics: Imagine a grocery store that uses bright lights and upbeat music to influence your shopping decisions. Behavioral economics studies how such psychological factors and social influences impact how people spend money in India.

  • Ecological Economics: India faces challenges like climate change and resource depletion. Ecological economics looks for solutions, studying how to achieve economic growth without harming the environment. For example, it might analyze the impact of pollution regulations on businesses.

  • Environmental Economics: Managing India’s natural resources like water and forests is crucial. Environmental economics examines how to use these resources efficiently, considering factors like pricing and regulations. For instance, it might study the effectiveness of water conservation programs.

  • Health Economics: Balancing healthcare costs and accessibility is a concern in India. Health economics analyzes how resources are allocated in the healthcare system, studying things like the impact of insurance schemes and drug pricing on patients.

  • Information Economics: In today’s digital India, access to information plays a vital role. Information economics examines how information asymmetry (when one party has more information than the other) affects economic decisions. For example, it might study how online reviews influence consumer choices.

  • International Economics: India’s trade with other countries impacts its economy. International economics analyzes the effects of trade agreements, foreign investments, and global economic trends on India’s growth and development.

  • Labour Economics: With a large workforce, understanding labor issues is critical for India. Labour economics examines factors like wages, working conditions, and skill development to understand the labor market. It might study the impact of minimum wage policies on employment.

Some branches, like Monetary Economics (studying money and banking systems) and Public Finance (analyzing government spending and taxes), are less relatable with specific examples but are still crucial for economic stability.

  • Urban Economics: As Indian cities grow, managing urban spaces is important. Urban economics uses economic tools to analyze issues like traffic congestion, affordable housing, and urban planning. It might study the impact of public transportation investments on traffic flow.

By understanding these specialized branches of economics, we gain a deeper understanding of the complex forces that shape the Indian economy. It’s like having a toolbox with different tools for different jobs – each branch equips us to analyze and address specific economic challenges faced by India.



In Short – Macroeconomics

Macroeconomics in a Nutshell 

Macroeconomics takes a big-picture view of the economy, focusing on its overall performance and how it behaves. Unlike microeconomics, which looks at individual decisions, macroeconomics examines factors affecting the entire economy.

Two Key Areas of Focus:

  1. Long-Term Growth: This area explores what drives long-term economic growth, which means an increase in a nation’s total income.
  2. Short-Term Fluctuations: This area studies the ups and downs of the economy, also known as the business cycle. It examines what causes these fluctuations and their effects on employment and national income.

Understanding Macroeconomics Helps Us:

  • Maintain Price Stability: Macroeconomics helps control inflation and deflation, keeping prices stable.
  • Evaluate Economic Performance: By studying how different sectors interact, macroeconomics provides a holistic view of the economy’s health.
  • Make Informed Decisions: Businesses and investors can leverage macroeconomics to understand how broad trends and policies affect their industries.
  • Analyze Government’s Role: Macroeconomics examines the government’s influence on economic growth and stability.
  • Consider International Factors: Macroeconomics recognizes the interconnectedness of global markets through trade and investments.

Key Macroeconomic Indicators:

  • Economic Growth: Measured by factors like GDP and national income, economic growth reflects the economy’s expansion over time.
  • The Business Cycle: The NBER tracks the business cycle using economic indicators to identify periods of growth, recession, and recovery.

In Conclusion:

Macroeconomics provides a broad understanding of the economy, helping us measure its health and design effective policies for sustainable growth.


Difference between Microeconomics vs Macroeconomics

Feature Microeconomics Macroeconomics
Focus Individual decision-making within markets Overall performance of the national economy
Key Actors Consumers, Firms Households, Businesses, Government
Central Model Demand & Supply Economic Growth & Business Cycle
Key Concepts * Consumer Choice Theory * Production & Cost Analysis * Market Structures * Economic Growth * Business Cycle * Inflation & Unemployment * Fiscal & Monetary Policy
Analysis Level Microcosm (individual markets) Big Picture (entire economy)
Timescale Short-term (within a specific market) Long-term (national economic trends)
Policy Focus Consumer welfare, competition in specific sectors Economic stability, full employment, sustainable growth
UPSC or Other State PCS or Other Govt. Exam Relevance Analyze impact of government policies on consumers & businesses, evaluate efficiency in different markets, formulate policies for specific sectors Evaluate government policies for macroeconomic goals, analyze impact of global trends, formulate policies for economic stability and growth
Analogy Performance of individual instruments in an orchestra How instruments come together to create a symphony

Also Check 

1.Meaning of Economics, Economic , Economical, Economy in Depth Click Me

This Blog Written by Nitin Arora ( Founder of Arora IAS)

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