This article intends to clarify the difference between microeconomics and macroeconomics, which are two different fields of the economics.
Both micro- and macroeconomics provide fundamental tools to help fully understand how an economy is managed and sustained. While the two disciplines appear to be different, they are actually interdependent and complement one another since there are many overlapping issues between the two fields.
Microeconomics deals with the ways in which individuals, firms and families take decisions regarding allocation of the limited amount of resources at their disposal in the context of markets where goods and services are traded. It studies the decisions that people and businesses make regarding their allocation of resources and prices of goods and services, taking into account taxes and regulations created by governments. It focuses on supply and demand and other forces that determine the price levels seen in the economy. For example, it would study how a specific company could maximize its production and capacity, so that it could lower prices and better compete in its industry.
Macroeconomics, on the other hand, studies the behavior of the economy as a whole and not just specific companies, but entire industries and economies. It looks at various economic indicators, such as Gross National Product (GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels, all this aiming at keeping the country on growth course.
So the bottom line is that microeconomics takes a bottoms-up approach to analyzing the economy from individual persons' and businesses' point of view, while macroeconomics takes a top-down approach, taking the entire economy of a country into considertaion. Microeconomics tries to understand human choices and resource allocation, and macroeconomics tries to answer such questions as "What should the rate of inflation be?" or "What stimulates economic growth?"
