TWO BRANCHES OF ECONOMICS

ECONOMICS

MACROECONOMICS MICROECONOMICS
The prefix “micro” is
From the Greek prefix
derived from the Greek
“makro”
word “micros” meaning
meaning LARGE
SMALL.
MACROECONOMICS
 It deals with the averages and aggregates of the entire economy
such as NATIONAL INCOME, AGGREGATE OUTPUT,
AGGREGATE SAVINGS, etc.
 It has a wide scope and interprets the economy of a country as a
whole
 It is also known as the INCOME THEORY because it explains the
changing levels of national income of an economy during a
period of time.
 It deals the circular flow of income and expenditures between
sectors of the economy.
 It helps in developing policies appropriate resource distribution
at economy level such as inflation, unemployment level, etc.
MICROECONOMICS

 It deals with the decision making of single economic variables

such as demand, price, consumer, etc.
 It is narrow in scope and interprets the small constituents of the
entire economy.
 It is also known as the PRICE THEORY because it explains the
process of economic resources allocation on the foundation of
relative prices of several good and services.
 It deals with the flow of various factors of production from a
single owner to a single user of those resources.
 It helps in developing policies appropriate resource distribution
at firm level.
 LET’S FOCUS

Microeconomics Macroeconomics
SUBJECTS Economic Behavior Economic Behavior

LEVELS OF ANALYIS Individual Units Entire Economy

AGENTS Individual Aggregate

(sectors of economy)
MARKETS Particular goods and Composite
services
PRICES Relative Absolute

MARKET ADJUSTMENT Only via changes in In short run via changes

prices in quantities.
 Microeconomics Macroeconomics
Studies individual income Studies national income

Analyzes demand and supply of Analyzes total employment in the

labor economy
Deals with households and firms Deals with aggregate decisions
decision
Studies individual prices Studies overall price level

Analyzes demand and supply of Analyzes aggregate demand and g

good
 SUMMATIVE ASSESSMENT (1/4 pc of paper)

Classify the following topics: Write MIC if it fall under

Microeconomics; MAC if it falls under Macroeconomics
1. The inflation rate in the Philippines budget in the last quarter of
2018 was 4.8%.
2. A ₱340-billion deficit in the Philippine budget is expected in the
year 2015.
3. Prices of Toyota vehicles are predicted to up in December
4. Garlic prices in the past months have risen because producers
hoarded their supplies in their business.
5. Unemployment rate has dropped because of the increase in the
number of OFWS.
 SUMMATIVE ASSESSMENT (1/4 pc of paper)

Classify the following topics: Write MIC if it fall under

Microeconomics; MAC if it falls under Macroeconomics.

6. In the past years, Coca-Cola was named the fastest selling

product in the market.
7. Rental on land could not be increased by landowners because of
the Rent Control Law.
8. Prices of apples and grapes tend to increase during Christmas
season.
9. The Philippine Economy grew at a rate of 5.8% in 2018.
10. Philippine Congress passed the Value Added Tax Law to
strengthen the Philippine tax system.
 ASSIGNMENT (1/2 CROSSWISE)

1. What are the basic problems of

society?
2. Discuss its natures and how it
helps cope up with constraints
and limitations?
If you are born poor
its not your mistake,
but if you die poor, it is.

-Bill Gates
Founder of Microsoft