0INTRODUCTION
Every individual has specific needs, for the satisfaction of which, he/she needs resources. But the resources that a person have, to satisfy his needs are always limited and have alternative uses, and his needs are unlimited. For example, Ram has Rs. 100 (resource) which he can use to satisfy his various requirements such as food, cloth, entertainment (alternative uses) etc. But all needs can not be satisfied with Rs—100 (a limited resource). So, the problem of scarcity of resources in relation to our needs has led to the emergence of Economics as a subject matter of study.
ECONOMICS
Economics is the study of economic problems or issues that arises due to the scarcity of resources about our needs and alternative uses of those scarce resources. So, it focuses on the rational management of limited resources in such a way that economic welfare is maximized.
Economics is broadly divided into two parts:
- Microeconomics
- Macroeconomics
Microeconomics
Microeconomics refers to that part of the economics in which the economic problems are studied at the level of an individual - an individual firm, a particular consumer. The main components of microeconomics are Theory of consumer behaviour, Theory of producer behaviour, Theory of price etc.
Macroeconomics
Macroeconomics refers to that part of economics in which the economic problems are studied at the level of the economy as a whole, i.e. at an aggregate level. The main components of macroeconomics are Theory related to the equilibrium level of output or employment, Fiscal and Monetary Policies, Money supply and Credit creation, National income etc.
It should be noted that while studying microeconomics, macro variables are assumed to be constant, and while exploring macroeconomics, micro variables are assumed to be constant.
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