Micro Macro Economics Definition – Economicsymh.com

Read the micro macro economics definition including the difference between the two concepts and how they affect goods and services and economic growth.

Micro Macro Economics Definition

Macroeconomics and microeconomics are concepts of economics that helps to understand, predict and also stabilize the economy. They are very important concepts that you should learn. This will help you understand how an economic system is administered and sustained. These two concepts help to understand and predict the trends of the economy thus enabling decision makers to make informed decisions that will not cause financial instability. But what is the difference between micro and macro economics:


Microeconomics is the study of business and individuals decisions regarding the prices of goods and services. It majorly focuses on the demand and supply and other factors that determine the prices of goods and services in the economy. It is a very important economic concept that analyses consumer behavior and economy forces.  Companies use it to determine the volume of goods they should manufacture. In addition, Microeconomics is used to determine the price of the product depending on the amount of good in the market (supply). When the supply of a certain product is high, the demand is low, and the price is also low. When there is low supply of a certain product in the market, the demand is high, and the price shoots up.


Macroeconomics is a broad area of economics that focuses on economic growth and changes in national income. Basically, it deals with national income, unemployment rates, foreign trades, GDP and the prices indices. It studies the relationship between different factors such as national income, national output, consumption, savings, unemployment, inflation and international trade.

Governments make different policy changes in order to avoid economic distresses such as unemployment and inflation. Macroeconomists use two major strategies that stabilize the economy;

Fiscal policy– the important aspects of fiscal policy is government spending and taxation.

Monetary policy– monetary policy controls the central bank, the monetary authority and the government. It focuses on a steady supply of money and interest rates to sustain country’s economy.

Microeconomics focuses on demand and supply and determines the price level. It facilitates decision making for individuals and businesses.

Macroeconomics is a broad field that focuses on change in national income and economic growth. It focuses on GDP, unemployment rate and prices indices of the entire economy.

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