Did you know that economics issues that surface in our newsfeed can actually be categorised into two levels in Economics? Microeconomics examines the behaviour of individual decision-making units in the economy. The two key groups of decision-makers are consumers (or households) and producers (or firms). Macroeconomics examines the economy as a whole to obtain a broad picture and aggregates of many individual units.
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Microeconomics focuses on individual markets and decisions by individual consumers (households) and producers (firms).
For example: Microeconomics is concerned with consumers and producers make choices and how their interactions in markets determine the prices of individual goods and services (in the goods and services market), and the prices of individual factors of production (in the resource market) |
Macroeconomics focuses on the economy as a whole, it considers the price level for the economy as a whole, rather than for one market.
For example: Macroeconomics examines the total income and output of the entire economy, a swell as total employment and the general price level (as opposed to prices of individual goods, services and resources). |
Positive Economics are economic analyses which focus on facts and cause-and-effect relationships. Positive economics tries to establish scientific statements about economic behaviour, and deals with what the economy is actually like. Such scientific-based analysis is critical to good policy analysis.
Positive statements are descriptive and usually acceptable to all economists, for example:
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Normative Economics are economic analyses which incorporate value judgements about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies.
Normative statements involve value judgements, for example:
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