Net National Product (NNP)

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NNP  Net National Product (NNP)  Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’. The formula to derive it may be written like this: NNP = GNP – Depreciation or, NNP = GDP + Income from Abroad – Depreciation. The different uses of the concept of NNP are as given below: (i) This is the ‘National Income’ (NI) of an economy. Though, the GDP, NDP, and GNP, all are ‘national income’ they are not written with capitalized ‘N’ and ‘I’. (ii) This is the purest form of the income of a nation. (iii) When we divide NNP by the total population of a nation we get the ‘per capita income’ (PCI) of that nation, i.e., ‘income per head per year’. A very basic point should be noted here that this is the point where the rates of depreciation followed by different nations make a difference. Higher the rates of depreciation lower the PCI of the nation (whatever be the reason for it logical or artificial as in the case of depreciation being used as a...
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MICRO AND MACRO ECONOMICS

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 MICRO AND MACRO ECONOMICS

After the Great Depression (during the 1930s) the domain of economics got divided into two broad branches—the micro- and macro-economics. John Maynard Keynes is considered the father of macroeconomics (the branch came into being after the publication of his seminal work, The General Theory of Employment, Interest and Money, in 1936).

Simply put, if macroeconomics (macro) is about the forest, microeconomics (micro) is about the trees. While the former deals with the big picture (the forest) the latter deals with the details (the trees) that make up the forest. Micro and macro are the Greek words which mean ‘small’ and ‘big’, respectively.


While micro takes a bottoms-up approach to analyse economy, macro takes a top-down approach. Taking an example, while micro tries to understand the choices which consumers make and the income they earn, macro tries to understand the dynamics of inflation and growth.
Though, they appear to be different, they are actually interdependent and complementary since there are many overlapping issues between them.                For example, a rise in inflation (macro effect) will cause rise in the cost of raw materials leading to rise in prices which consumers will pay (micro effect). 

Micro theory evolved from the theories of how prices are determined, macro, on the other hand, is rooted in empirical observations that existing theory could not explain. While there are no competing schools of thought in micro, macro has schools like New Keynesian or New Classical. Since the late 1980s rather these divisions have been narrowing . 

Econometrics is the third core area of economics other than the micro and macro. This field seeks to apply statistical and mathematical methods to economic analysis. The sophisticated analyses of micro and macro sub-fields would not have been possible without the major advances made in econometrics over the past century or so.

Difference Between Micro and Macro Economics


BASIS FOR COMPARISONMICRO ECONOMICSMACRO ECONOMICS
MeaningThe branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics.The branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.
Deals withIndividual economic variablesAggregate economic variables
Business ApplicationApplied to operational or internal issuesEnvironment and external issues
ToolsDemand and SupplyAggregate Demand and Aggregate Supply
AssumptionIt assumes that all macro-economic variables are constant.It assumes that all micro-economic variables are constant.
Concerned withTheory of Product Pricing, Theory of Factor Pricing, Theory of Economic Welfare.Theory of National Income, Aggregate Consumption, Theory of General Price Level, Economic Growth.
ScopeCovers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.Covers various issues like, national income, general price level, distribution, employment, money etc.
ImportanceHelpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) within the economy.Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole.
LimitationsIt is based on unrealistic assumptions, i.e. In microeconomics it is assumed that there is a full employment in the society which is not at all possible.It has been analyzed that 'Fallacy of Composition' involves, which sometimes doesn't proves true because it is possible that what is true for aggregate may not be true for individuals too.

Example Micro Economics :- 

* How a local business decides to allocate their funds.    
* How a city decides to spend a government surplus .   
* The housing market of a particular city/neighborhood.    
* Production of a local business.
* In general, microeconomics is concerned with decision making that has low-level effects, that is, a city, whereas microeconomics has high-level, large-scale effects, that effects nations.
 

Example Of Macro Economics :-  

* using interest rates.
*taxes.
*government spending to regulate an economy's growth and stability.






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