Microeconomics vs. Macroeconomics: What’s the Difference?
Economics is broadly divided into two different categories namely microeconomics and macroeconomics.
Microeconomics is the study of specific segments and markets of an economy. It looks at the issues like
consumer behavior, individual labor market, and theory of firms. On the other hand, macroeconomics is
the study of the whole economy. It looks at the aggregate variables such as aggregate demand, national
output, and inflation.
Norwegian economist Ragnar Frisch is credited with coining the terms "microeconomics" and
"macroeconomics" in 1933. Frisch also coined the term "econometrics" around the same time
What is Microeconomics?
Microeconomics focuses on the choices made by individual consumers as well as businesses concerning
the fluctuating cost of goods and services in an economy. Microeconomics covers several aspects, such as
Supply and demand for goods in different marketplaces.
Consumer behaviour, as an individual or as a group.
Demand for service and labor, including individual labor markets, demand, and determinants like
the wage of an employee.
One of the main features of microeconomics is it focuses on casual situations when a marketplace
experiences certain changes in the existing conditions. It takes a bottom-up approach to analyze the
economy.
What are the Different Components of Microeconomics?
The different components of microeconomics include:
Market demand and supply (For example Textile)
Consumer Behavior ( for example Consumer Choice Theory)
Producers are driven by individual preferences.
Market-specific labor markets ( For example demand labor wage determination in specific
markets).
What is Macroeconomics?
Macroeconomics studies the economic progress and steps taken by a nation. It also includes the study of
policies and other influencing factors that affect the economy as a whole. Macroeconomics follows a top-
down approach, and involves strategies like –
The overall economic growth of a country.
Reasons that are likely to influence unemployment and inflation.
Fiscal policies are likely to influence factors like interest rates.
Effect of globalization and international trade.
Reasons that affect varying economic growths among countries.
Another feature of macroeconomics is that it focuses on aggregated growth and its economic correlation.
What are the Different Components of Macroeconomics?
The different components of macroeconomics include:
National Output
Unemployment
Inflation
Difference between Microeconomics and Macroeconomics
S.No Microeconomics Macroeconomics
Macroeconomics studies a
Microeconomics studies individual
1. nation’s economy, as well as
economic units
its various aggregates.
Macroeconomics is the study
Microeconomics primarily deals with
of aggregates such as national
2. individual income, output, price of
output, income, as well as
goods, etc.
general price levels.
Macroeconomics focuses
Microeconomics focuses on overcoming
on upholding issues like
3. issues concerning the allocation of
employment and national
resources and price discrimination.
household income.
Microeconomics accounts for factors Macroeconomics account for
4. like the demand and supply of a the aggregate demand and
particular commodity. supply of a nation’s economy.
Microeconomics offers a picture of the
Macroeconomics helps ensure
goods and services that are required for
optimum utilization of the
5. an efficient economy. It also shows the
resources available to a
goods and services that might grow in
country.
demand in the future.
Macroeconomics help
Microeconomics helps to point out how
determine the equilibrium
6. equilibrium can be achieved at a small
levels of employment and
scale.
income of the nation.
Microeconomics also focuses on issues The primary component of
7. arising due to price variation and macroeconomic problems is
income levels. income.
Examples of Microeconomics and Macroeconomics
Examples of Microeconomics
Price determination of a particular commodity.
Consumer equilibrium.
Output generated by an individual organization.
Individual income and savings.
Examples of Macroeconomics
National income and savings.
General price level.
Aggregate demand and Aggregate Supply
Poverty.
Rate of unemployment
