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What Is the Difference between Microeconomics and Macroeconomics?
There are a number of differences between microeconomics and macroeconomics, though in general these differences come down to the scope involved with each aspect of economics. Microeconomics is concerned with individual businesses and consumers, including considerations for consumer buying habits with relation to a particular individual or one business. Macroeconomics, on the other hand, looks at the economy on a larger scale and considers the financial activities of an entire country, or numerous countries that affect each other financially. While both micro and macroeconomics often involve understanding concepts such as supply and demand, these concepts are considered at vastly different scales.
Both microeconomics and macroeconomics are aspects of economics in general, and they are typically discussed together by financial analysts and financial forecasters. While there are differences between each, most effective managers and business leaders consider both when trying to understand the economy. The most basic difference between these two aspects of economics is their scale. Microeconomics deals with individual consumers or businesses and the supply and demand involved with each party; macroeconomics involves an understanding of larger economic systems and how national economies change and develop over time.
One of the biggest differences between microeconomics and macroeconomics is how equilibrium is determined and evaluated for the economy. Equilibrium in microeconomics typically comes about when supply and demand for one particular company are even. In macroeconomics, on the other hand, this equilibrium can only be achieved if the aggregate supply and demand among all businesses and consumer households is even. Microeconomics and macroeconomics are also quite different in how supply and demand are viewed and considered. The focus in microeconomics is on supply and demand for a single product or at most the products offered by one company, while macroeconomics deals with aggregate supply and demand for an entire country or worldwide economy.
Most economists recognize the importance of analyzing and understanding both of these aspects of the economy. While they can be considered as different and separate components of the economy, they are also interconnected. Changes to the national economy in a country often impact individual businesses and households, such as increased interest rates that change consumer spending habits and alter resource costs for companies. It is often easiest to consider microeconomics and macroeconomics together as the way in which changes in one system affect the other: in microeconomics these changes come from the bottom up, while in macroeconomics the changes occur from the top down.
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Discussion Comments
@Mor - Yes, and that is also one of the problems with the state of humanitarian aid at the moment as well.
Often people only pay attention to one side or the other. They try to plump up the econmoy of a country, without looking at how to deal with individuals, or they deal with individuals without tracking what that will mean for the country as a whole. It becomes microeconomics vs macroeconomics, when it should be about both.
Which is one of the reasons microfinance is the way to go right now. It is good for the individual *and* the economy of the country as a whole. If you are looking for a way to contribute to other nations, microfinance is your best option to do it right. It's fun for the giver, too.
I only did one economics course at university but they tried to cover both micro economics and macro economics.
They are both important to running a company or to anything really. I feel like if people paid better attention to both areas instead of one or the other, we might not get into the global financial crises that seem to happen too often.
I guess it's the equivalent of dealing with all the little things while paying attention to the big picture.
Both microeconomics and macroeconomics were required courses for my Political Science degree. I took microeconomics my first semester and macroeconomics the second semester with the same instructor.
I honestly did not enjoy microeconomics very much because there were a lot of equations to learn and I found it a bit confusing.
Macroeconomics on the other hand, was so much fun. It was more about economic theories and economies of countries, the global market and so forth. I enjoy macroeconomics much more and did really well in it.
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