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Differences Between Macroeconomics and Microeconomics

If you are interested in the economics field, you may hear about Macroeconomics and Microeconomics. but do you ask yourself if there are differences between both of them or not? In this article, we will discuss the definition of them and Macroeconomics Vs Microeconomics

Macroeconomics is the branch of economics that deals with performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies.

Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

Macroeconomics Vs Microeconomics

At the following paragraphs, we will discuss some differences and similarities between macroeconomics and microeconomics  


It applied to operational or internal issues and covers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc. it is very important because it is helpful in determining the prices of a product along with the prices of factors of production within the economy but it is based on unrealistic assumptions. it is assumed that there is full employment in the society which is not at all possible.  It is concerned with: 

  • Supply and demand in individual markets
  • Individual consumer behavior.
  • Individual labor markets.
  • Externalities arising from production and consumption. 


  • It helps in the determination of prices of a particular product and also the prices of various factors of production land, labor, capital, organization, and entrepreneur.
  • It is based on a free enterprise economy, which means the enterprise is independent to take decisions.


  • The assumption of full employment is completely unrealistic.
  • It only analyses a small part of an economy while a bigger part is left untouched.

microeconmics chart


It applied to environment and external issues and covers various issues like national income, general price level, distribution, employment, money. it is very important because it maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, unemployment, and poverty as a whole but it sometimes doesn’t prove true because it is possible that what is true for aggregate may not be true for individuals too. It is concerned with:

  • Fiscal policy. 
  • Reasons for inflation and unemployment.
  • Economic growth.
  • International trade and globalization.
  • Reasons for differences in living standards and economic growth between countries.
  • Government borrowing.


  • It is helpful in determining the balance of payments along with the causes of deficit and surplus of it.
  • It makes the decision regarding economic and fiscal policies and solves the issues of public finance.


  • Its analysis says that the aggregates are homogeneous, but it is not so because sometimes they are heterogeneous.
  • It covers only the aggregate variables which avoid the welfare of the individual.

Finally, you should know that both of them are interdependent. as microeconomics focuses on the allocation of limited resources among the individuals, the macroeconomics examines how the distribution of limited resources is to be done among many people.


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