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Will it be possible for what happened at macroeconomics to differ from how agents react to some stimulus at micro level?
Will it be possible for what happened at macroeconomics to differ from how agents react to some stimulus at micro level?
Expert Solution
The study of both the branches of economics captures two different aspects.
The microeconomics studies the actions of an individual household and an individual firm whereas the study of macroeconomics captures the broad issues related with inflation, unemployment, economic growth.
The performance at the macro level depends on the decisions made by the individual household or firm.
The two branches are dependent on each other in a way that an individual business decision is influenced by the economy's overall growth performance.
Suppose, an individual labor demands a hike in wages. At micro level, this will imply that the particular labor cannot alone influence the wage rate whereas if the entire labor union collectively ask for higher wages, they will be able to influence the wage rate.
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