Science is a broad field that has been researched and studied for many centuries and with the rapid growth, development and improvement of the Internet Communication Technology (ICT) sector and infrastructure, the future of science looks bright. There are however three main branches of science that are mostly studied on; natural, formal and social science.
It is the last branch of science (social science) that I am going to focus on. Social science deals with the natural day to day activities of the human life. It is the type of science that places more emphasis on the different experimental and scientific methods that are easy to analyze and interpret in relation to a specific topic under study.
Under the social science umbrella, some of the main topics that are studied in the modern science world are anthropology which is the study of human behavior and human history; others are education, geography, law, psychology, sociology, communication and development studies, information science and economics. The focus of my letter that will be addressed to international professionals will focus on economics as a branch of social science; the letter will critically discuss and explain the difference between the main branches of economics; microeconomics and macroeconomics. The letter will however briefly look at another branch of economics; scarcity. As an economists, I have been in several situations that involve either microeconomics or macroeconomics, I will however give relevant examples on microeconomic and macroeconomic decisions that I have made as a profession, factors that propelled me to making the decision(s) and the impact the decision(s) had on my personal life as well as to the life of other people that I interact with on a day to day basis.
The Difference between Microeconomics and Macroeconomics
The two major branches of economics that are mainly studied are microeconomics and macroeconomics; however there is another “minor” branch that is also discussed once in a while; scarcity. In economics, scarcity refers to the situation where there is tension or conflict between the limited resources and the unlimited needs. As an economist, individual scarcity that someone may face may include, limited time, finances and skills to satisfy a particular need, whereas for a nation scarcity can be in form limited or lack of natural resources, limited technology in various economic sectors and limited human and financial capital. This scarcity may hinder the rapid growth and development of an individual or a nation in general.
The main focus is however on the microeconomics and macroeconomics.
To my understanding as an economist, microeconomics specifically deals with how individuals, both consumers and entrepreneurs make personal decisions in relation to financial planning, budgeting and spending. It focuses on the supply and demand factors and how they affect the prices of goods, services and how this in turn affects the economic growth and development. Microeconomics as a branch of economics has three sub branches under it, even though they are rarely discussed and they are; comparative micro statistics, micro statics and micro dynamics. The importance of microeconomics in the business cannot be under estimated since the success of this segment of economics will determine the success of macroeconomics. For the time I have been an economist, both professionally and as an “amateur”, some of the importance’s of microeconomics I have observed are; helps to understand the working of the economy of the business as well as the nation, it is helpful in the well-organized utilization employment of resources, it helps entrepreneurs in International Trade. In addition to that, microeconomics helps individuals to understand the importance of individual and business taxation processes and finally it helps in evaluating different economic policies and also explains the conditions of efficiency in demand and supply
Whereas microeconomics focuses on individual, small and medium entrepreneurs, macroeconomics goes a step further and deals with a nation’s economy and the different sectors that greatly contribute to the nation’s economic growth, development and stability. For instance some of the sectors that are studied in macroeconomics are agriculture, industrial development among others. It is however important to note that not all nation’s depend on same sectors for their economic growth and development. The main purpose of macroeconomics is to fast track the nation’s economic growth and development, increase the employment rate and wages / salaries for employees and casual workers. Another aim of macroeconomics is to control prices of basic commodities and services and reduce or eliminate inflation. As an economist, it is important to note that we (economist) play more pivotal role in macroeconomics than in microeconomics, in macroeconomics, we are mandated with the responsibility of helping in solving disputes related o unequal wages among employees, monitor population growth, analyze the causes of rural – urban migration and increase in criminal activities. Apart from economists playing a pivotal role in macroeconomics, the role of the government cannot be overlooked, the government implements three basic policies that are used to influence macroeconomics, these are fiscal, monetary and growth policies. Macroeconomics involves all players in the business community, each of them plays and a specific role in the growth and development of a nation, the major players are firms (that deal with production of goods and services), the government, the consumers and the rest of the world.
Microeconomics and Macroeconomics Phenomenon
As an economist, I have had different situations that I had to make tough microeconomics and macroeconomics decision depending on the various factors. The global economic crisis that affected Europe, America and most of Africa from 2007 is the time that as an economist I had to make tough decisions. When it came to microeconomics, I had to adjust my personal and financial budget because of the recession of the time. This meant that I had to forgo some of the basic commodities that I was used to having.
It is during the same period (during the economic crisis) that as an economist and entrepreneur I was faced with tough decision. The high cost of production of goods and services forced me to lay off some of my employees since I was not in a position to cater for their wages. It was only by so doing that I was able to meet the high cost of raw materials and other costs. This negatively affected them and their families but for the company to remain relevant and competitive, that was the decision I could make as an economist and entrepreneur.
Review of the Paper
Microeconomics and macroeconomics can determine the economic growth and prosperity of the nation. This paper has critically looked at the difference between the two and it has also given the function of both the macroeconomics and microeconomics to the growth of the economy. The paper has closed by giving relevant examples of situations that are related to the two main branches of economy and the situation that forced me as an economist to make. The negative and positive impact of the decision I made in macroeconomics has been mentioned in the paper.
It is also important to note that, the paper briefly mentioned a third branch of economics know as scarcity.