Micro
and Macro Economics:--
In micro economics the word micro means 'small'
so this economics is the study on the basis of individual.
Whereas macro economics is the study of economics
on the basis of economy as a whole.
Micro economics study towards particular region
or industry
1)
Product pricing
2)
Consumer behaviour
3)
Factor pricing
4)
Study of firms
5)
Location of industry
Macro Study large aggregate or overall conditions
of economy
●
National income and output
●
General price level
●
Balance of trade and Balance of
payment
Economics
as positive and normative economics
Positive
economics:- economics should be neutral between ends
●
A positive economics or pure
science analysis cause and effect relationship between variables but it does
not pass value judgement
In other words it states what is or not and ought
to be. Robbin's emphasized the positive aspect of science but marshall and
pigou considered the ethical aspect of science which obviously are normative.
Completely neutrality between ends means neither
feasible not desirable.
Normative
economics:- as normative economics includes value
judgements, it is prescriptive in nature and describe what should be the
things.
For eg:- what should be the level of national
income
Normative economics is concerned with welfare
prepositions.
Conclusion:-
economics may be treated as pure and positive
economics, but as tool of practical application it must have some normative
goals in view.
Methods
of study:-
1) Deductive method:- this method is also called abstract, anlytical prior method. Under this
method laws are deduced logically.
It is also called
abstract method because it is based on abstract reasoning and not on actual
facts.
Principal steps through this method:-
1)
Perception of problem
2)
Defining the technical terms
and make appropriate assumptions
3)
Deducing hypothesis and,
4)
Testing of hypothesis deduced
Law of inverse relationship between price and
quantity demanded has also been established through this method.
Limitations
of this method:-
1)
Assumption generally turn out to
be untrue or partially true
2)
Valid conclusions cannot be drawn
in the absence of proper knowledge of the whole situation and
3)
It is dangerous to claim Universal
validity for the economic generalization so deduced.
2)
Inductive method:- It is also known as
hypothetical and realistic method as it moves from general to particular level. Under this method conclusions are drawn on the basis of collections and
analysis of relevant facts.
Principal
steps:-
1)
Perception of the problem
2)
Collection, classification and
analysis of data by using appropriate statistical techniques
3)
Find out the reasons for
relationship established through statistical analysis and to set the rules for
the verification of principals
Inductive method is increasingly being used in
macro because
1)
Statistical induction leads to
precise exact and measurable conclusions.
2)
It underlines the importance of
relativity of economic laws.
3)
It shows that generalisations are
valid only under certain conditions.
Limitations:-
1)
Risk of hurried conclusions having
being drawn from an insufficient number of facts
2)
Difficulties involved in
collection of facts
3)
The fact that observation and
experimentation have very limited application in a science that deals with
human activities.
BY TAVINDER SINGH ANY SUGGESTION IS WELCOME... THANK YOU..
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