What is the difference between macroeconomics and microeconomics?

Economics is a field that is divided into two subdivisions in the AP curriculum: macroeconomics and microeconomics. 

There are thus two exams you can potentially take: AP Macroeconomics and AP Microeconomics.

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Definitions 📖 

• Microeconomics deals with the impacts of individual economic decisions
• Macroeconomics deals with the impacts of aggregate (total) economic decisions.
• Specifically, microeconomics deals with individual firms, households, products, prices, wages, etc, while Macroeconomics deals with national income, GDP, price level, etc.
• Macro is the big picture: GDP, inflation, unemployment- Take a look at this blog to learn more about GDP and how to calculate it
• Micro is the zoomed in: individuals, markets, firms and structures
• Interested in learning about Micro? sStart with this explanation on Supply and Demand

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Examples

• For example, when determining the right wage to pay workers in your factory you use the microeconomic factors of marginal revenue product and demand.
• Similarly, when determining the GDP of a country you use the macroeconomic factors of consumer expenditure, government expenditure, net investment, and net exports.

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Caveat

• Some economic principles are present in both the study of Macroeconomics and Microeconomics
• These are known as the basic economic principles and include the principles of scarcity, opportunity cost, comparative and absolute advantage, the production possibilities curve, etc.
• Macroeconomics and microeconomics work TOGETHER - they are not two completely separate fields

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Conclusion

• Macroeconomics and Microeconomics have different focuses, but one must learn both to understand the economy as a whole.

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