Microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets. Microeconomics focuses on the “What?" and "For Whom?"questions. It examines how a society decides to produce the bundleof goods and services it does (the "what" question), and who getsthese goods and services (the "for whom" question). It explores how various systems of incentives and ways of making decisions (such as"dollar voting" or various forms of political voting) work to solvethe "what" and "for whom" questions. Central in much of thisexamination is the concept of economic efficiency.
Macroeconomics deals with topics of inflation and unemployment. Macroeconomists study aggregated indicators suchas GDP, unemployment rates and price indices to understand how the whole economy functions. Macroeconomists develop modelsthat explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings,investments, international trade and international finance. Macroeconomics is a broad field of study,however, there aretwo major areas of research in Macroeconomics:
The attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle).
The attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by both governments and large corporations to assist in thedevelopment and evaluation of economic policy and business strategy