Differences between Macroeconomics and Microeconomics
In economy, as in all sciences, we must establish different sections so that when studying it is easier and more organized. The first division usually done is to distinguish between microeconomics and macroeconomics. So you won't have any trouble understanding them and to help you study economics, on OneHowTo.com we explain the differences between microeconomics and macroeconomics.
What is macroeconomics
Macroeconomics is the part of the economy that is responsible for studying the economic performance in general and economic policies carried out on a large scale, for example in a country. That's to say it encompasses the running of society as a whole , not as individual markets. For more information on the subject, take a look at our article on the basics of macroeconomics.
Some of the most used variables are gross domestic product, unemployment, tax levels or interest levels, among others.
What is microeconomics
Microeconomics is the part that deals with the behavior of each operator individually, such as families, businesses or workers.
It exhaustively analyses laws such as supply and demand, between consumers and suppliers, the price level, wages or the elasticity of each product. That is to say, how to reach an agreement between the needs of consumers and the businesses that offer goods and services, as well as all the "psychological" variables that they can affect, such as product quality or the different needs of each person. For more information, take a look at how microeconomics affects businesses.
Differences between macroeconomics and microeconomics
From the above definitions we highlight several differences that help us distinguish them:
- Macro looks for a general perspective and micro for an individual perspective.
- The first of these studies economic actors overall, such as a country, and the second studies specifics, such as a consumer.
- The variables used are very different, for example in macroeconomics the GDP observes the total production of a country and microeconomics observes the amount produced by a single company.
- There are situations that affect macroeconomics but not microeconomics and vice versa. For example, a really cheap new car model affects microeconomic variables but not macroeconomic variables.
- Although they are very different, they are not totally independent and we need both to understand the economy. For example, devaluation affects both macro and microeconomics, inflation of macroeconomics will also affect microeconomics, the MPC also affects macroeconomics too.
Take a look at our article on how inflation affects the economy for more information.
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