This article will help you to learn about the difference between micro economics and macro economics.

Difference between Micro Economics and Macro Economics

The prefix macro comes from a Greek word meaning “large”. Thus freely translating, macroeconomics means “economics in the large.”

This is in contrast to microeconomics which can be interpreted to mean “economics in the small.”

To shed further light by example, when we analyse the output and the price of the output for a single firm, we are engaged in micro economic analysis.


Similarly, analysis of the level of employment and the wages paid to workers in a certain firm is, again, microeconomic analysis. By way of contrast, analysis of the level of output for the whole economy, the (average) wage of all workers employed throughout the economy, and so on is the stuff of macro-economics. Essentially, then macro-economic analysis is the analysis of economy-wide or aggregate variables.

Hence we observe that there is no difference in principle between micro­economics and macro-economic—it is simply that macro-economic deals with variables that are highly aggregated. Thus, these two branches of economics differ only in degree, namely, the degree of aggregation involved.

We cannot stress too strongly that the analytical tools of macro-economic theory, especially the supply and demand approaches, are equally applicable to the elucidation of macro-economic problems.

There is not one branch of economics, microeconomics, which uses supply and demand analysis and another branch of economics, macro-economics, which uses some other apparatus. Both micro-economics and macro-economic are concerned with the interaction of trans-actors on markets and as a result, each is amenable to analysis with the same tools.


Macro-economic does not concern itself only with a single market as in partial equilibrium analysis nor does it try to deal simultaneously with the behaviour of all markets as in general equilibrium analysis. Macro-economics occupies the middle ground.

Vast numbers of individual markets are aggregated and only then do we proceed to examine the interdependence among the reduced number of markets. Thus, macro-economics can be said to be the application of quasi-general equilibrium analysis to economic problems.