Differences Between Microeconomics and Macroeconomics: The study of economics is divided into microeconomics and macroeconomics by the modern economists. Both of them discuss the economical activities but are used in different sectors under different circumstances. In spit of having some similarities, they also have some differences which have been given below.
Also Read: What are micro and macro economics?
- Name Origination: The word ‘micro’ comes from the Greek word ‘mikros’ which means ‘millions of parts’. And the word ‘macro’ is also from a Greek word ‘makros’ which means ‘large’.
- Definition: Microeconomics is a branch of economics which describes the part of economy or it describes the economy of individuals such a consumer, a firm etc. On the other hand, the macroeconomics describes the entire economy such as national income, total output, total consumption etc.
- Theory: Microeconomics is price theory which is the combination of theory of demand and theory of production. Macroeconomics is called income theory that explains the result of total production and why the level rises and falls.
- Focus: Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. Macroeconomics would look at how an increase/decrease in net exports would affect a nation's capital account.
- Analyze: Microeconomics analyses the partial behavior of economy whereas the macroeconomics analyses the entire.
- Concepts: Microeconomics discuss the behavior of any decision making unit. On the other hand, macroeconomics analyses the economic problem as a whole.
- Importance: Microeconomics helps in the formulation of economic policies calculated to promote efficiency in production and the welfare of the masses. Macroeconomics has got the importance in the economic theory in its pursuit of the solution of urgent problems.
- Approaches: Microeconomics takes a bottoms-up approach to analyzing the economy while macroeconomics takes a top-down approach.
- Equilibrium: Partial equilibrium method is used in microeconomics and general equilibrium method is used in macroeconomics.
- Supporters: The classical and the new classical economists are the supporters of the microeconomics. The macroeconomics gets the supports of the modern economists.