Microeconomics

Macroeconomics, on the other hand, involves the "sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national economic policies relating to these issues" and the effects of government actions (e.g., changing taxation levels) on them. Particularly in the wake of the Lucas critique, much of modern macroeconomic theory has been built upon 'microfoundations'—i.e. based upon basic assumptions about micro-level behaviour.

1. Introduction……………………………………………………………………………………..3

2. Overview………………………………………………………………………………………..3

3. Assumptions and definitions……………………………………………………………………3

4. Modes of operation……………………………………………………………………………..4

5. Market failure…………………………………………………………………………………..4

6. Opportunity cost…………………………………………………………………………….. ...5

7. Applied microeconomics……………………………………………………………………….6

8. Conclusion……………………………………………………………………………………...7

9. Links……………………………………………………………………………………………7