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macroeconomics has solid microeconomic foundations. In other words, its
theories should have evidential support in microeconomics. A few authors
(for example, Kurt Dopfer and Stuart Holland) also argue that
'mesoeconomics', which considers the intermediate level of economic
organization such as markets and other institutional arrangements, should be
considered a third branch of economic study.
Theories developed as a part of economic theory have also been applied
in other fields such as criminal behavior, scientific research, death, politics,
health, education, family, dating, etc. This is allowed because economics is
fundamentally about human decision-making. One of the main purposes is to
understand how economies work, and what are the relations between the
main economic players and institutions.
Economics can also be divided into numerous sub disciplines that do
not always fit neatly into the macro-micro categorization. These sub
disciplines include: international economics, development economics,
industrial organization, public finance, economic psychology, economic
sociology, institutional economics and economic geography.
Another division of the subject distinguishes positive (descriptive)
economics, which seeks to predict and explain economic phenomena, from
normative economics, which orders choices and actions by some criterion.
26 Comment on the classifications. The phrases in bold in the text will
help you.
27 Define which sub-discipline deals with the following subjects and
fill in the table.
Microeconomics
Macroeconomics
• household incomes
• national income
• employment
• inflation
• prices in local markets
• small businesses
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