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The two main branches of economics are Microeconomics and Macroeconomics.

Microeconomics looks at the behavior of individuals, homes, businesses or even groups of these. Microeconomics looks at prices of things and of services. It wants to help people decide how to divide society’s resources. To do this, microeconomics wants to understand how decisions are made and how these small decisions affect bigger things. Macroeconomics looks at the all the economy. It tries to explain the causes of numbers like national income, employment rates, and inflation. Connecting the two branches has been important and the general idea since the early 1980s. A good macroeconomic theory is based on microeconomics, meaning one can explain macroeconomic events using microeconomics for individuals.

MACROECONOMICS

Like most definitions in economics, there are various competing definitions of the term Macroeconomics and Microeconomics.

 The simplest answer to the question “What is Macroeconomics?” can be found at WordReference.com. They state that “Macroeconomics is the branch of economics concerned with aggregates, such as national income, consumption, and investment “.

The Economist’s Dictionary of Economics defines Macroeconomics as “The study of whole economic systems aggregating over the functioning of individual economic units. It is primarily concerned with variables which follow systematic and predictable paths of behavior and can be analyzed independently of the decisions of the many agents who determine their level. More specifically, it is a study of national economies and the determination of national income.”

 The website Tutor2U.net answers the question “What is Macroeconomics” with the following response: “Macroeconomics considers the performance of the economy as a whole. Many macroeconomic issues appear in the press and on the evening news on a daily basis. When we study macroeconomics we are looking at topics such as economic growth; inflation; changes in employment and unemployment, our trade performance with other countries (i.e. the balance of payments) the relative success or failure of government economic policies and the decisions made by the Bank of England.”

 Wikipedia.org states that “Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. Macroeconomics can be used to analyze how best to influence policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments. ”

Introduction to Macroeconomics:

Macroeconomics, branch of economics concerned with the aggregate, or overall, economy. Macroeconomics deals with economic factors such as total national output and income, unemployment, balance of payments, and the rate of inflation. It is distinct from microeconomics, which is the study of the composition of output such as the supply and demand for individual goods and services, the way they are traded in markets, and the pattern of their relative prices.

 At the basis of macroeconomics is an understanding of what constitutes national output, or national income, and the related concept of Gross National Product (GNP). The GNP is the total value of goods and services produced in an economy during a given period of time, usually a year. The measure of what a country’s economic activity produces in the end is called final demand. The main determinants of final demand are consumption (personal expenditure on items such as food, clothing, appliances, and cars), investment (spending by businesses on items such as new facilities and equipment), government spending, and net exports (exports minus imports).

Macroeconomic theory is largely concerned with what determines the size of GNP, its stability, and its relationship to variables such as unemployment and inflation. The size of a country’s potential GNP at any moment in time depends on its factors of production—labor and capital—and its technology. Over time the country’s labor force, capital stock, and technology will change, and the determination of long-run changes in a country’s productive potential is the subject matter of one branch of macroeconomic theory known as growth theory.

The study of macroeconomics is relatively new, generally beginning with the ideas of British economist John Maynard Keynes

  in the 1930s. Keynes’s ideas revolutionized thinking in several areas of macroeconomics, including unemployment, money supply, and inflation.

MICROECONOMICS

Perhaps the simplest answer to the question “What is Microeconomics?” can be found at WestValley.edu. They state that “Microeconomics deals with the decision making and market results of consumers and firms”.

 Wikipedia.org states that “Microeconomics is the study of the economic behavior of individual consumers, firms, and industries and the distribution of total production and income among them.It considers individuals both as suppliers of labor and capital and as the ultimate consumers of the final product.”

 The Economist’s Dictionary of Economics defines Microeconomics as “The study of economics at the level of individual consumers, groups of consumers, or firms… The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit.”

 Apart from all the above definitions I’ll state as the following:

Microeconomics is the branch of economics that deals with small units, including individual companies and small groups of consumers. Economics is concerned with the allocation of scarce means among competing ends. People have a variety of objectives, ranging from the satisfaction of such minimum needs as food, clothing, and shelter, to more complex objectives of all kinds, material, aesthetic, and spiritual. However, the means available to satisfy these objectives at any point in time are limited by the available supply of factors of production (labor, capital, and raw materials) and the existing technology.
Microeconomics is the study of how these resources are allocated to the satisfaction of competing objectives. It contrasts with macroeconomics, which is concerned with the extent to which the available resources are fully utilized, or increase over time, and related issues. It is not always possible to make a distinction between microeconomics and macroeconomics. For example, the difference between conflicting schools of thought in macroeconomics is sometimes traced to differences in assumptions related to microeconomics.