Difference between microeconomics and macroeconomics

Economic is a study about how individuals, businesses and governments make choices on
allocating resources to satisfy their needs. These groups determine how the resources are
organised and coordinated to achieve maximum output. They are mostly concerned with the
production, distribution and consumption of goods and services.
Economics is divided into two important sections, which are: Macroeconomics &
Microeconomics
Macroeconomics deals with the behaviour of the aggregate economy and Microeconomics
focuses on individual consumers and businesses.
 Microeconomics is the study of particular markets, and segments of the economy. It
looks at issues such as consumer behaviour, individual labour markets, and the
theory of firms.
 Macroeconomics is the study of the whole economy. It looks at ‘aggregate’ variables,
such as aggregate demand, national output and inflation
Micro economics involves
 Supply and demand in individual markets.
 Individual consumer behaviour. e.g. Consumer choice theory
 Individual labour markets – e.g. demand for labour, wage determination.
 Externalities arising from production and consumption. e.g. Externalities

Macroeconomics involves
 Monetary / fiscal policy. E.g. what effect does interest rates have on the whole
economy?
 Reasons for inflation and unemployment.
 Economic growth
 International trade and globalisation
 Reasons for differences in living standards and economic growth between countries.
 Government borrowing