Microeconomics Vs. Macroeconomics
the field of economics is often broken down into two broad categories, microeconomics and macroeconomics. remember the goal of all economics is to analyze the production and consumption of finite resources, ? oil, wheat, capital or ? labor. microeconomics observes these issues from individual or business perspective. say carl owns a super market and has to price each item in his store. each price will be influenced by his competitor's pricing. he also makes choices about the wages and benefits to offer his employees, which depend on the number of qualified workers in the area. because he is applying rules of supply and demand to his individual business, he is using microeconomics, also known as the bottom-up approach to economics. macroeconomics looks at the issues from the perspective of the country as a whole, and the policies affecting the economy. for instance, shirlen, like carl, is interested in the supply and demand for labor, but for a different reason. she is a policy adviser for the federal government. if shirlen evaluates how a change in tax ? will affect the unemployment rate across the entire country, she will be engaging in macroeconomics. macroeconomics looks at entire industries or economies, which is why it is referred to as the top-down approach. while both are often touched separately, there is plenty of ?. for instance, at a macro level if a new federal low makes it more attractive for people to work, it ? such as lowering the country's unemployment rate. at a micro level, carl may be forced to increase wages, if he wants to attract more workers. ultimately, a strong understanding of economics requires an understanding of both macro and micro perspectives.