The division of economics into micro and macro economics was first introduced by Ragnar Frisch in 1933.

Microeconomics vs Macroeconomics

Microeconomics focuses on the behavior of individual consumers and firms, and how they interact with each other in markets. It analyzes how people make decisions regarding the allocation of resources and how they respond to changes in prices and incentives.

Macroeconomics, on the other hand, deals with the economy as a whole. It examines the performance of the economy in terms of growth, inflation, and unemployment. It also studies the role of government in regulating the economy and addressing issues such as income inequality and poverty.

Why the division was necessary?

The division of economics into micro and macro economics was necessary because:

1. Complexity of the economy: The economy is a complex system with many interdependent parts. Studying the economy as a whole requires a different approach than studying individual parts.

2. Different tools and methods: Micro and macro economics require different tools and methods of analysis. Microeconomics relies on mathematical models and game theory, while macroeconomics uses macroeconomic models and econometric techniques.

3. Different policy goals: Micro and macro economics have different policy goals. Microeconomics aims to promote efficiency and consumer welfare, while macroeconomics aims to stabilize the economy and promote full employment.

Conclusion

In conclusion, the division of economics into micro and macro economics has been essential in understanding the behavior of the economy as a whole and the behavior of individual consumers and firms. It has also helped policymakers in formulating policies that promote economic growth and stability.

The division of economics into microeconomics and macroeconomics was given by Norwegian economist, Ragnar Frisch in 1933.