Microeconomics, Macroeconomics, Positive and Normative Economics

Once Economics is defined, the MSBSHSE Std XI syllabus introduces two different ways of classifying how the subject is studied: by the level at which it is analysed (microeconomics vs macroeconomics), and by the type of statement it makes (positive vs normative economics).

Microeconomics and Macroeconomics. The terms come from the Greek mikros (small) and makros (large); they were introduced into economic vocabulary by the Norwegian economist Ragnar Frisch in 1933. Microeconomics studies the economic behaviour of individual units — a single consumer, a single household, a single firm, or a single industry — and how the prices of individual goods and factors are determined. Because price determination sits at its core, microeconomics is also called Price Theory; it covers the theory of demand, theory of supply, consumer behaviour, production and cost, and the different market forms. Macroeconomics, by contrast, studies the economy as a whole using aggregates — total (national) income, the general price level, aggregate demand and aggregate supply, and total employment. Because its central concern is aggregate income, macroeconomics is also called Income Theory; it grew rapidly after the Great Depression of the 1930s and John Maynard Keynes' General Theory of Employment, Interest and Money (1936).

Microeconomics and macroeconomics are complementary, not competing — understanding a state economy such as Maharashtra's needs both the microeconomic lens (how individual farmers or firms respond to a price change) and the macroeconomic lens (how the state's or the central government's budget and interest-rate policy affect the economy overall). …