Often you will hear reference to Microeconomics or Macroeconomics.
What is the difference between the two?
Micro applies to individual parts of the economy whilst macro applies to the economy as a whole.
If there is a discussion about the wages of nurses, then this is the realm of microeconomics.
A discussion of the wage level in the economy as a whole is macroeconomics.
Much of the discussion that you hear in the news is macroeconomics. Its about the state of the economy, how fast prices are rising, the level of unemployment, the balance of payments and how fast or slow the economy is growing.
Microeconomics will be more specific, the impact of car travel on the economy, whether we are eating too much red meat, the cost of health care etc.
Simple ways to remember it.
- Micro = individual parts of the economy (people, firms, markets).
- Macro = the whole economy (countries, national income, inflation, unemployment).
Or
- Microeconomics is looking at a single tree.
- Macroeconomics is looking at the entire forest.
EXAM TIP:
Most exam papers have a paper on Microeconomics, even if its not called that, and one of Macroeconomics.
So if you are asked about the impact say of subsidies for electric vehicles (EVs) and you start responding, that it will increase the demand for EVs and so create employment opportunities and so the rate of unemployment will fall in the economy, you will not be answering the question.
Some papers will be a mixture of the two and your job is to give the appropriate micro or macro response.