Hello. This is Nada from Seito Medical School. This time we will talk about macroeconomics. Economics. Yeah. Economics is also a subject that I have a lot of fondness for. When you think of economics, the first thing that comes to mind is balance or equilibrium theory. If demand increases, the price will increase. When supply increases, price decreases. That's an example of that. Economics consists of macroeconomics and microeconomics, and the field of micro-foundation of macroeconomics integrates these two seemingly contradictory academic fields. I'm trying to. In the end, this micro-foundation seems to be motivated by the desire to simulate market movements, and science is the study of ``prediction'' that ultimately results in something that simulates nature.
Now, let's talk about the relationship between macroeconomics and microeconomics. Brother? If someone says this to you, it might be a good idea to respond by saying that they're siblings who don't look alike at all.
First, what is economics? The main purpose of economics is to equitably distribute the earth's limited resources, such as metals and oil. Iron and oil are limited resources. In economics, everyone has things that cannot be obtained by everyone, such as air and water, but water is one of the few precious resources in desert areas. In economics, something that is rare and valuable is called scarcity. Markets exist to fairly distribute these scarce resources to many people.
In the market, goods are exchanged using currency, or money. In macroeconomics, the major players that exchange money are households, businesses, and governments. These three players use the causes of market economy movements, that is, movements in economic variables such as economic size, employment, prices, and interest rates. It is the responsibility of macroeconomics to study things related to the economy as a whole, such as inflation, economic growth rates, and booms and busts. In macroeconomics, the purpose of government policies related to the economy, that is, economic policies, is to stabilize price movements and economic growth rates.
Stabilizing means balancing, a state that is neither extremely good nor extremely bad. For example, the idea that the higher the economic growth rate is, the better it is because the number of wealthy people increases can be countered by saying that a high economic growth rate causes inflation and heats up the economy, making people's lives more unstable. In fact, as the economy grows and inflation occurs, the prices of goods and goods rise before wages, so some people may find their lives temporarily difficult.
In this way, macroeconomics deals with the economy as a whole, that is, the economy of a country. On the other hand, in microeconomics, individual players, such as a household or a company, are the subject of analysis. As for the market, according to general equilibrium theory, as I mentioned earlier, when the number of people who want something increases, that is, when the demand increases, the value of the item increases, and when the number of people who want something decreases, that is, when the demand decreases, the value of the item increases. value decreases.
In this way, if microeconomics is an individual discipline and macroeconomics is an overall discipline, then economics is divided into microeconomics and macroeconomics. In that case, the method of microeconomics, which looks at individual players as a whole, or macroeconomics, is called reductionism. The idea is that if you add each part together, you can see it as a whole.
Alternatively, there is a non-reductive theory that treats macroeconomics as macroeconomics and microeconomics as microeconomics, and treats each separately. The basis for this claim is, for example, the fallacy of composition.
The fallacy of composition refers to an economic phenomenon in which the actions of the individual and the actions of the whole are different. For example, if an individual tries hard to save, the amount they save may increase, but if people save as a whole, consumption will decrease, wages will decrease, and in the end, the amount saved will not increase.
In other words, there are parts of microeconomics and macroeconomics in which different economic laws (market principles) are at work, and I believe that the sum of microeconomics does not simply constitute macroeconomics. I also believe that microeconomics and macroeconomics involve different mechanisms, and I do not believe that simply adding up the players in microeconomics will result in the movement of macroeconomics as a whole.
This is Hotaru no Hikari. Readers who saw the article on physiology that I posted a while back may know that the idea of looking at the whole as a collection of individuals is a general idea in science, just as it is in economics. I don't know. If you think about it normally, I think it is an obvious fact for everyone that the movement of individual brain cells and the function of the brain as a whole are different.
On top of that, just as physiology is said to be a discipline of integration, I believe that it is also the aspiration of economics to integrate microeconomics and macroeconomics. The challenge of modern economics, which is to provide a micro-foundation to macroeconomics, stems from this awareness of the problem.
I put too much emphasis on explaining things as a reflection on this article, and I lacked humor. I'm reflecting on this a little. Based on that, I would like to respond well to the next challenge. Thank you to everyone who read this article. I hope you have a good day today. See you soon.
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