Comparison Between Macroeconomic and Microeconomic - Essay Example

Macroeconomics also analyses some sub aggregates like spending on consumptions and investments and their components. These are also treated to be the components of GDP or Gross Domestic Product. The effect of fiscal as well as monetary policy is under the purview of macroeconomics. It can be characterized as modeling of sectors on the basis of some micro components. The factors that can shed its impact on the long term growth prospects as well as can affect the level of national income fall under the domain of macroeconomics.

The factors that have such kind of potential include modifications in technology, the rate of capital accumulation and augmentation of the labor force (Cencini, 2005, p. 2). The models of macroeconomics can be used to find out the trends in some specific sector and forecast or anticipate the future results. These forecasted results determined using those models are used by the government as well as for the large ownership corporations as this kind of analysis will help them in their path of development and build new strategies of business that suites their purpose.

Some of the famous macroeconomic models include Aggregate demand, the Aggregate supply model and the ISLM model. The once divided fields of monetary policy and the business cycles led to the emergence of macroeconomics. The contribution of J.M. Keynes to macroeconomics cannot be ignored. His book “General Theory of Employment, Interest and Money” depicts the key concepts of macroeconomics. He offered a modern theory of economics which dealt with the problem on why the market is not clear and eventually a school of economists evolved who seemed to follow the Keynesian theory (Andolfatto, 2005, p. 2). Microeconomics deals with the basic elements in the economy.

The households and the firms are treated to be the agents involved in the circle of microeconomics.