What is the Difference Between Microeconomics and Macroeconomics

What is Macroeconomics

The term Macro originates from the Greek Letter Makros, whose denotation is large. The father of macroeconomics is John Maynard Keynes. In macroeconomics, the term large is used to refer to the whole economy. Therefore, macroeconomics is the study of economics in which we deal with economic issues at the entire level of the economy. In this study, we work for the welfare of a country. Economic welfare includes employment, output growth, and dealing with inflation or depression.

Inflation comes because of rising in the price of goods and depression occurs due to the lack of goods and services at different levels of the economy.

It examines aggregate economic variables that are :

  • National output
  • Employment
  • Inflation
  • Economic Growth

Macroeconomics analyzes the following aspects :

  • Consumption
  • Investment
  • Government spending
  • International trade

What is Microeconomics

Microeconomics is also a branch of economics. It includes the study of individual agents. The behaviour of individuals in making decisions about the allocation of scarce resources is also examined.

Microeconomics understand the following aspects :

  • How individuals and firms make decisions.
  • Consumer choice theory.
  • Production theory.
  • Allocate resources efficiently
  • Cost analysis.
  • Market structures (perfect competition, monopoly, oligopoly).
  • The role of government intervention in markets.

Microeconomics examines the factors that influence the behaviour of economic agents are :

  • Price
  • Income
  • Preferences
  • Market Conditions

Below we have listed the differences of microeconomics and macroeconomics:

Difference between Microeconomics and Macroeconomics


Issue of scarcity and choice are studied at level of an individual, a firm or an industry.Issue of scarcity and choice are studied at level of an economy as a whole.
2Micro Economic variables are consumer's demand and consumer's supply.Macro Economic variables are aggregate demand and aggregate supply.
3Micro Economics agents are consumers and producers.Micro Economics agents are Statutory bodies like RBI,SEBI and TRAI.
4Allocation of resources is the central issue in micro economicsAttention is focused on unemployment, rate of inflation. nation's total output and other matters of economy.
5Partial equilibrium analysis study method is used in micro economics.General equilibrium analysis study method is used in macro economics.
6It follows bottom-up approach.It follows a top-down approach.
7Business Applications of Microeconomics are pricing decisions,production decisions,market analysis,resource allocation,labor economics.Business Applications of Macroeconomics are economic forecasting, investment decisions, international trade,business cycle analysis,government policies.
8Area of study in microeconomics are supply and demand,consumer theory, production and costs, market structures.Area of study in macroeconomics are national income and output,economic growth and development,money and banking,fiscal Policy,international trade and finance.

This article is on the topic of the difference between microeconomics and macroeconomics. Let’s dive into the deep discussion of micro vs macroeconomics :


In microeconomics, we deal with the issues of scarcity and choice at an individual, firm level. For instance: a household, industry, etc. In microeconomics, we observe how a consumer behaves towards his choice of goods and services in order to maximize his goods. The issues of shortage and choices at the level of an economy as a whole are studied in macroeconomics. Basically, we observe how natural resources should be used so that social welfare can be maximized.

Economics Variables

Microeconomics includes variables of consumer demand and producer supply. On the other hand, aggregate demand and aggregate supply are the economic variables of macroeconomics. Aggregate demand is the collection of demand for goods and services demand in the economy. On the other hand, the flow of goods and the flow of services is regarded as aggregate supply.

Economic Agents

Economic Agents are those agents who take economic decisions, such as individuals and institutions. Individual agents are consumers and producers. These types of agents give priority to their personal gains.

On the other hand, institutional agents are state or statutory bodies. Institutional agents are RBI and SEBI. These agents give priority to social welfare.

  • The Reserve Bank of India makes a variety of choices to keep money flowing throughout the economy.
  • SEBI (Securities and Exchange Board of India) is a regulatory body in India.

Degree of Aggregation

The degree of aggregation is limited in the case of microeconomics as compared to macroeconomics. In the study of microeconomics equilibrium  industry is observed. In this case, all types of industries are aggregated that are producing commodities.The equilibrium of the economy as a whole is observed in macroeconomics. In this, all types of economic units of  economy are aggregated. For instance, agricultural, industrial, and service sector economic activities are observed in macroeconomics.

Distinct Set Of Assumptions

Micro and Nacro economics have their own different set of assumptions. Certain variables might be constant in Microeconomics but not in Macroeconomics. The vice-versa is also true. For example, total output and employment are constant in case of microeconomics. Whereas, in macroeconomics the distribution of output (income) is constant.

Read the latest education blogs

Predominant Issues

The allocation of resources in microeconomics is the major issue of microeconomics. Resource management should be done in a proper manner so that maximum profit can be generated. The main issue in macroeconomics is the determination of overall output.

Study Strategies

Both follow different methods to study the economy. The method of study in microeconomics is described as general equilibrium analytics. On the other hand, the strategy of study in macroeconomics is partial equilibrium analysis.

Micro and Macro Contradiction

The logic might be different in micro and macro-economic. Sometimes the logic in microeconomics will not be logical in macroeconomics. To clearly understand this concept let us take an example: An individual who saves more contributes to his future property.

If people in the economy save more, then it will decline demand for goods and services.In consequence, investment in the economy also declines and production and employment also fall. Poverty in the economy also rises.

Also Study: Scope of Macroeconomics

Who is the Father of Macroeconomics

John Maynard Keynes

The term Microeconomics and Macroeconomics were first given by

The term microeconomics and macroeconomics was first given by Ragnar Frisch in 1993.

Micro and Macro Approaches are Complementary.

Some logic which is valid in microeconomics might not be valid in macroeconomics.

Sharing Is Caring:

Leave a Comment