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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 unfortunately, both disciplines are no fan of each other. In the present, there will be many changes that will affect the financial services industry. There are many forces that affect the current 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. The area that most business students tend to gravitate toward is microeconomics. Profit maximization is essentially what this particular business area targets. Businesses can make as much money as possible through fixed costs and marginal costs. In simple terms, how CEOs view the world is what microeconomics is all about. 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.

For people who are particular with policy, though, what attracts them the most will have to be macroeconomics. 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 may be bad for the market will be the rise of oligarchies and monopolies. Macroeconomics essentially looks at the world using the eyes of the government. This means that it tries to make everyone happy or perhaps equally unhappy.

By looking at the differences of these two perspectives, you know very much that they will be going against each other. While efficient markets generally make everyone happy, the government must take the necessary steps that may go against the microeconomics of businesses to get there. 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. Imposing prohibitions and regulations for certain activities may also be necessary so that some will not be put to harm financially.

You can always expect the government and business sector to fight over market regulation extent. With a booming economy where everyone is happy, though, the fight between microeconomics and macroeconomics goes off temporarily. If a business makes money, it means that it is happy. Consumers are equally happy too because they have money. The government is also happy when everything in the system seems to work just good for all involved sectors.

But then, the financial services industry can come to a ruin with how present-day financial crises are showing. Any market bubbles are the responsibility of government regulators. To secure the economy, the government must make sure to enact the necessary financial and securities regulations and measures.

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