Economics is a science that studies human behavior in fulfilling its relatively unlimited needs by using limited resources. Each resource has an alternative use (opportunity cost). According to George Bernard Shaw, “Economy Is the Art of Making the Most Out of Life”, while according to the general definition of economics, discussing how resources are allocated among various alternative uses to satisfy human desires (Katz and Rosen, 1998).
Economics arises because of three realities, namely: (1) relatively unlimited human needs, (2) limited available resources, and (3) each resource has several alternative uses.
Broadly speaking, economics can be separated into two, namely microeconomics and macroeconomics.
Macroeconomics studies economic variables in aggregate (overall). These variables include: national income, employment opportunities and or unemployment, the amount of money supply, inflation rate, economic growth, and international payment balance.
Macroeconomics studies economic variables in aggregate (overall). These variables include national income, employment opportunities for the employed and unemployed, the amount of money supply, inflation rate, economic growth, and international payment balance. Macroeconomics studies the main economic problems as follows:
The extent to which various resources have been utilized in economic activities. If all resources have been utilized, this situation is called “full employment.” Conversely, if there are still resources that have not been utilized, it means that the economy is underemployment or there is unemployment/not yet in the position of full employment.
The extent to which the economy is stable, in particular stability in the monetary field, If the value of money tends to decrease in the long term, it means inflation occurs. Instead, there is deflation.
The extent to which the economy experiences both economic growth and growth accompanied by an improving income distribution is determined by trade offs; if one improves, the other tends to deteriorate.
Microeconomics studies economic variables in a small scope, for example, companies and households. In the micro economy, individuals learn about how to use their resources so that the optimum satisfaction level is achieved. In theory, each individual who combines the optimum consumption or production with other individuals will create a balance on a macro scale, assuming ceteris paribus.
Macro and Micro Definitions
The definition of macroeconomics and, for example,
In economics, there are two fundamental scopes, namely macroeconomics and microeconomics. Macroeconomics is the science that studies the economy in a broad and overall scope. The macroeconomic economy is general and always discusses and resolves problems on its own.
Macroeconomics usually discusses large issues such as national income, employment opportunities and or unemployment, the amount of money supply, inflation rate, economic growth, and international payment balances. Macroeconomic policies are usually run by the government or a body that has a large scope, such as an international-scale company.
The definition of microeconomics and, for example,
Conversely, in the micro economy, you will find a smaller scope based on the point of view from below. This study usually discusses small-scale problems, such as analyzing parts carried out by small units of economic activity. In the microeconomic approach, it is generally related to decisions taken by market players by referring to market prices.
Activities in microeconomics usually refer to smaller scopes, such as companies, households, or themselves. Another fundamental example is the activity of the market in the market, namely buying and selling activities between sellers and buyers. Basically, buyers try to satisfy all their needs and sellers try to make a profit.