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Learning More About Financial Regulation in Microeconomics and Macroeconomics

Ask any economics student about the disciplines of economics, and they will tell you that these two are microeconomics and macroeconomics. And sadly, these two disciplines are against each other. In the present, there will be many changes that will affect the financial services industry. There are many things that are affecting the financial regulation of the country. It is only in present years in the financial services industry that two major forces are clashing with each other. Microeconomics is the area of business that students often lean towards. Profit maximization is essentially what this particular business area targets. Fixed costs and marginal costs are the two aspects that help businesses maximize their ability to make money. Essentially, you are looking at the world using the eyes of the CEO with the concept of microeconomics. It is the job of the CEO to do what they can for the benefit of the company for it to deliver value and make more money.

On the other hand, macroeconomics is very much attractive to policy geeks. For such an economic discipline, the primary goal is to attain market equilibrium. This implies that whatever services or goods are in the greatest number, they can be exchanged at prices that are mutually agreed by both sellers and buyers. You get a good competition between business establishments. What is bad for businesses will be oligarchies and monopolies. If you look at the world with macroeconomics, you are using the eyes of the government. In essence, this economy strives to make everyone involved happy, which often opposites making everyone equally unhappy too.

You can expect these two perspectives to be going against each other with who different they are. Though most people are aware that efficient markets will benefit everyone, the steps to get there that the government must take often go against the microeconomic business interest. If necessary, the government, especially the financial industry, may block a merger so that they can promote competition in businesses. Sometimes, there must be proper legislation of disclosures so that informed decisions are made between buyers and sellers. To avoid financially harming others, sometimes, specific activities must go through the necessary prohibitions and regulations.

You can always expect the government and business sector to fight over market regulation extent. However, you should know that if the economy is on the rise and everyone is quite happy, the power struggle between microeconomics and macroeconomics stops. When businesses make money, they become happy. Consumers having money also means that they are happy too. The government is quite happy because the system is working just fine for everyone.

Unfortunately, the ongoing financial crises have signaled the impending ruin of the financial services industry. It is up to government regulators to keep tabs on any market bubbles. It is also their job to recommend the necessary financial and securities regulations and measures to prevent whatever is going on from harming the economy.

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