Micro and Macro Economics
Microeconomics is one of the economic branches which examines the actions of individual agents in an economy. These agents include firms and households. Microeconomics is interested in the decisions that the individual agents make using their limited resources and impact on the supply and demand of goods and services in the economy. Macroeconomics examines the economies that consist of individual economic agents. Macroeconomics explores the economic phenomenon such as the GDP and how it relates to factors such as price levels, national income, and unemployment. Macroeconomics, in an economy, evaluates the aggregate behavior. Microeconomics and macroeconomics are similar in the sense that they focus on the allocation of resources. However, the division between the two branches of economics is important so that relationships between economic events are evaluated and analyzed comprehensively.
Sectors of the Economy
Economists use various types of frameworks to represent the economy. One of the most popular frameworks is referred to as the circular flow diagram. A large number of people and other organizations interact in the complex modern economy. The economic agents that are involved in an economy are grouped into the government sector, households, firms, and the rest of the world. As will be shown below, the different sectors of the economy interact in the markets.
The household sector includes everyone who consumes services and goods that are produced by the economy. It also includes everyone seeking to meet unlimited needs and wants. That is the major reason the sector handles consumption exp