The Difference Between Macro and

Microeconomics
Although there are other branches of economic study, micro and macroeconomics are the most
well-known. Over the years, both have become an increasingly common part of high school and
college-level curriculums. Despite their popularity, however, the principles of these disciplines
are frequently misunderstood or confused. While they share some of the same concepts and are
interrelated in important ways, there is a fundamental difference between micro and
macroeconomics. The simplest way to distinguish microeconomics from macroeconomics is to
think about the names of these two fields. As its name indicates, microeconomics is the study of
economics on a smaller, more detailed scale. Similarly, the basic definition of macroeconomics
is that it is the study of economics on a larger, broader scale.

Definition and Meaning of Microeconomics

Microeconomics looks at the behavior of individual people and companies within the economy.
It is based on the idea of a market economy, in which consumer demand is the driving force
behind the prices and production levels of goods and services. Microeconomics is interested in
how specific parties choose to use the limited resources that are available to them. It focuses on
what drives them to make their decisions, as well as the ways in which their decisions affect the
supply and demand of particular goods and services. In turn, these choices influence the price
levels of various commodities. Microeconomics also examines how the decisions of individuals
impact specific industries. For example, economists studying at the micro level might be
interested in discovering how current consumer demand is affecting the well-being of the oil
industry. Another basic principle of microeconomics is the "theory of the firm." This studies the
actions of businesses as they strive to increase their profits. It looks at which resources they
choose to utilize as inputs, how much they produce, and what they charge for their goods or
services. In summary, microeconomics concerns itself with the human beings whose purchasing
and production-related decisions come together to form the backbone of a given economy. Even
when it involves companies, the focus of microeconomics is always at the personal level.

 Microeconomics Practice
 Microeconomics Resource Links
 Principles of Microeconomics-Links
 Microeconomics Course Materials
 Principles of Microeconomics--Course Readings and Lecture Materials
 Review of the Principles of Microeconomics (PDF)
 Microeconomics--Goals and Trade-Offs
 Introduction to Microeconomics (PDF)
 Microeconomics: Overview
 Microeconomics: Media

Definition and Meaning of Macroeconomics

The most concrete definition of macroeconomics is that it is a study of "the big picture" in the
economy. Instead of focusing on individual households and firms, it examines conditions within
the economy as a whole. This is the most vital difference of micro and macroeconomics. In more
technical terms, macroeconomics looks at the factors that influence aggregate supply and
demand. Since it is associated with the conditions of national economies, it deals with such
statistics as unemployment rates, gross domestic product (GDP), overall price levels, and
inflation. Its general nature makes it closely associated with public policy. Most nations around
the world have their own central banks; in the United States, this is the Federal Reserve. In any
class about macroeconomics, the actions of a given country's central bank (known collectively as
monetary policy) will be a major topic of discussion. Those studying economics at the macro
level will learn about the factors that drive a central bank to manipulate the interest rates and
money supply of its respective nation at any given time. They will also learn about the ways in
which the decisions of the national government can affect the overall economy. These
governmental actions are known collectively as fiscal policy. Although macroeconomics has a
much broader focus than microeconomics does, many macroeconomic factors are essential to
making predictions and conclusions at the microeconomic level. For instance, knowing what the
unemployment rate is at the national level can help a microeconomist predict future layoffs in a
specific industry.

 Useful Macroeconomics Links for A.P. Students

 Links to Central Banks and Research Centers
 Useful Links for Computational Economics
 Macroeconomics Blogs
 Resources on Macroeconomics
 Links for Economists
 Economic History Links
 Resources from the Economic and Social History Society of Ireland
 Open Economy Macroeconomics (PDF)
 Macroeconomics: Origins and Concepts (PDF)

Differences Between Macro and Microeconomics

To an extent, both macro and microeconomics look at supply and demand, as well as price
levels. However, each field views these factors from a different standpoint. To better grasp the
meaning of macroeconomics, it might be helpful to think of it as a "top-down approach" toward
understanding the economy. Macroeconomics paints a picture of the economic conditions in a
particular country as a whole; however, knowledge of macroeconomic principles can be used to
develop an understanding of conditions for the individual players in the economy. Likewise,
microeconomics looks at the economy from the bottom up, but the information it gathers about
individual households and businesses is helpful in gaining an understanding of general economic
conditions. The difference of micro and macroeconomics may seem well-defined on the surface,
but these two categories of study can overlap in significant ways. In fact, no student of the
economy can truly comprehend the meaning of macroeconomics without comprehending the
meaning of microeconomics as well.

 Economics Links from Harvard University

 Academic Support Websites-Economics
 Economics--Media Resources
 Microeconomics vs. Macroeconomics
 What is Economics?
 Principles of Economics (PDF)
 Microeconomics Course--Comparison of Micro and Macroeconomics
 Microeconomic Theory: What's the Difference Between Microeconomics and
Macroeconomics? (PPT)
 What is Economics?: Microeconomics vs Macroeconomics (PDF)
 Microeconomics and Macroeconomics