What is the difference between macroeconomics and microeconomics?
The difference between these is that macroeconomics is looking at the economy of a country (or even of the world) as a whole. By contrast, microeconomics looks at a smaller part of the economy like one firm or one sector of the economy.
As an example of this, let us look at two questions having to do with the price of gas. A microeconomics study of this subject might look at why the price of gas has been going down recently in the United States. This is microeconomics because it looks only at the gas industry. A macroeconomics study might ask what impact the price of gas has on the overall US economy. This is macroeconomics because it is trying to understand something about the entire US economy.
Micro Economics :
- Micro Economics is derived from Greek word "mikros"
- Micro Economics studies the problems of individual economic units such as a firm, an industry, a consumer etc.
- Micro Economics studies the problem of price determination, resource allocation etc.
- While formulating economic theories, Micro Economics assumes that other things remain constant.
- The main determinant of Micro economics is Price.
Macro Economics :
- Macro Economics is derived from Greek word "makros"
- Macro Economics studies economic problems relating to an economy viz, National Income, Total Savings etc.
- Macro Economics studies the problem of economic growth, employment and income determination etc.
- Macro Economics is the study of the "big picture" of the whole economy.