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Welcome to the exploration of Microeconomics and Macroeconomics!

Microeconomics is all about how individuals and businesses make decisions. We'll dive into topics like supply and demand, helping you understand the basics of buying and selling.

On the flip side, Macroeconomics looks at the big picture of entire economies. Ever wondered why prices go up or down? Or why some people don't have jobs? We'll explore these questions and more.

By the end of our journey, you'll have a clearer picture of how the money game works on both small and large scales. Join me as we break down economic concepts in a simple and fun way. Let's get started!

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This video talks about the differences between microeconomics and macroeconomics:

Economics involves exploring how individuals navigate decision-making amidst limited resources and how these resources are distributed to fulfill desires and needs. Microeconomics delves into the behaviors of specific economic agents like consumers, households, and businesses, while macroeconomics addresses the overall economy, encompassing concerns such as unemployment, GDP, inflation, interest rates, government deficits, and policies. Governments employ monetary and fiscal policies to regulate the economy, with the former adjusting interest rates for stimulation or restraint, and the latter involving changes in taxes and government spending to invigorate economic activity.

Distinguishing between microeconomics and macroeconomics can be exemplified as follows:

Microeconomics: Analyzes a narrow sector of the economy, such as an individual business, and investigates the decision-making processes of economic agents within it.

Example: If a business acquires 50 new clients and experiences a boost in income, its subsequent increase in spending falls under microeconomics.

Macroeconomics: Addresses broader economic issues on a holistic scale, considering aggregate measures like inflation and GDP.

Example: If the government increases spending to stimulate the economy, this falls within the purview of macroeconomics.

Additional examples for clarity:

Microeconomics: Examining the impact of hiring more people on a business's expenses.

Macroeconomics: Analyzing the effects of an inflationary price increase on aggregate consumer demand.

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This video also talks about the differences between microeconomics and macroeconomics but in a more visual way:

Economics is divided into two main branches: microeconomics and macroeconomics. Microeconomics concentrates on the behavior of individual economic agents like consumers, households, firms, and industries. It examines the effects of changes in variables such as prices, incomes, and consumer demand. On the other hand, macroeconomics looks at the entire economy, considering factors like unemployment rates, prices of goods, inflation, and national income (GDP). It analyzes the effects of changes in the money supply and explores the causes of economic growth over time.

In microeconomics, the focus is on individual parts of the economy, studying how changes in specific variables impact consumer demand and how shifts in income levels influence the demand for particular goods. In macroeconomics, the examination broadens to encompass the overall economy, exploring variables like national income, inflation, unemployment rates, and changes in the prices of goods.

The interdependence of microeconomics and macroeconomics is evident, as macroeconomic analysis relies on an understanding of microeconomic behaviors and decisions. For instance, to address a macroeconomic question about how consumers respond to a decrease in interest rates, a comprehension of how individuals and firms would react at the microeconomic level is necessary. Essentially, microeconomics serves as the foundation for comprehending macroeconomics.

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This video provides an overview of introductory macroeconomics. It introduces key concepts in economics, including scarcity, opportunity cost, and the production possibilities curve. It covers microeconomics, focusing on individual economic actors, and macroeconomics, which examines the overall economy. The video by Jacob Clifford covers introductory macroeconomics.

The content discusses economic systems, the circular flow model, and important vocabulary such as transfer payments, subsidies, and factor payments. It explores demand and supply, equilibrium, and measurements in macroeconomics like GDP, unemployment, and inflation.

Detailed information is provided on GDP, its calculation, and what is included/excluded. The text also delves into nominal and real GDP, the business cycle, unemployment, and price stability.

Unit 2 covers concepts like the Consumer Price Index (CPI), inflation, and deflation. It introduces difficulty ratings for units.

Unit 3 discusses aggregate demand, the downward-sloping aggregate demand curve, and shifters. The text also covers aggregate supply, full employment, gaps, economic growth, and the Phillips curve.

The section on money covers its functions, types, M1 money supply, fractional reserve banking, and monetary policy. It explains the money multiplier, money creation, credit creation, and the balance sheet.

The Federal Funds Rate and Loanable Funds are discussed, along with the demand and supply of loans. Government borrowing and its impact on interest rates are explored.

Balance of payments, foreign exchange, appreciation, depreciation, and shifters of foreign exchange rates are detailed. The text also contrasts floating and fixed exchange rates.

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Microeconomics- Everything You Need to Know

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This video provides an overview of introductory macroeconomics, covering fundamental concepts such as scarcity, opportunity costs, and the production possibilities curve. It delves into economic systems, focusing on capitalism, and introduces the Circular Flow Model, emphasizing the interactions between businesses, individuals, and the government.

The discussion extends to demand and supply, equilibrium, and the occurrence of shortages and surpluses. Macroeconomic measures are introduced, including GDP, its calculation, and considerations for inflation and unemployment. The difficulty levels of different units are outlined, with Unit 2 considered moderately challenging.

The video then explores the demand curve, aggregate supply curve, and the transition from short run to long run. Economic growth, the Phillips curve, and the role of money in the economy are discussed. Fiscal policy, the money supply, and banking concepts, including the money multiplier, are explained.

The video covers monetary policy, balance sheets, and the loanable funds market. It explores the balance of payments, foreign exchange, and factors influencing exchange rates. The distinction between floating and fixed exchange rates is highlighted, along with the shifters of foreign exchange.

In summary, this video serves as a comprehensive guide to introductory macroeconomics, offering insights into various economic concepts and principles.

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Macroeconomics- Everything You Need to Know

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This website talks about what macroeconomics is, understanding macroeconomics and the history of macro economics:

What is macroeconomics:

Macroeconomics is a branch of economics that investigates the behavior of the overall economy, including markets, businesses, consumers, and governments. It analyzes economy-wide phenomena such as inflation, price levels, economic growth, national income, GDP, and unemployment. Key questions in macroeconomics involve understanding the causes of unemployment, inflation, and economic growth. The field aims to assess economic performance, identify driving forces, and project potential improvements.

Understanding macroeconomics:

Macroeconomics takes a broad perspective, examining variables like unemployment, GDP, and inflation. Macroeconomists develop models to explain the relationships among these factors, providing insights used by governments for economic, monetary, and fiscal policy decisions, by businesses for domestic and global market strategies, and by investors for predicting and planning for asset class movements. Economic theories, when properly applied, help illuminate how economies function and reveal the long-term consequences of policies and decisions. Macroeconomic theory also aids individual businesses and investors in making informed decisions by enhancing their understanding of the impact of broad economic trends and policies on their industries.

History of macroeconomics:

Although the term "macroeconomics" is relatively recent (dating back to the 1940s), many core concepts within the field have been studied for centuries. Issues such as unemployment, prices, growth, and trade have been concerns since the inception of economics in the 1700s. Early economists like Adam Smith and John Stuart Mill addressed issues that align with what is now recognized as the domain of macroeconomics.

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What Is Macroeconomics?

Macroeconomics is a branch of economics that studies how an overall economy-the market systems that operate on a large scale-behaves. Macroeconomics studies economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.

Some of the key questions addressed by macroeconomics include: What causes unemployment? What causes inflation? What creates or stimulates economic growth? Macroeconomics attempts to measure how well an economy is performing, to understand what forces drive it, and to project how performance can improve.

Macroeconomics deals with the performance, structure, and behavior of the entire economy, in contrast to microeconomics, which is more focused on the choices made by individual actors in the economy (like people, households, industries, etc.).

Understanding Macroeconomics

There are two sides to the study of economics: macroeconomics and microeconomics. As the term implies, macroeconomics looks at the overall, big-picture scenario of the economy. Put simply, it focuses on the way the economy performs as a whole and then analyzes how different sectors of the economy relate to one another to understand how the aggregate functions. This includes looking at variables like unemployment, GDP, and inflation. Macroeconomists develop models explaining relationships between these factors. Such macroeconomic models, and the forecasts they produce, are used by government entities to aid in the construction and evaluation of economic, monetary and fiscal policy; by businesses to set strategy in domestic and global markets; and by investors to predict and plan for movements in various asset classes.

Given the enormous scale of government budgets and the impact of economic policy on consumers and businesses, macroeconomics clearly concerns itself with significant issues. Properly applied, economic theories can offer illuminating insights on how economies function and the long-term consequences of particular policies and decisions. Macroeconomic theory can also help individual businesses and investors make better decisions through a more thorough understanding of what motivates ot, andarties and how to best maximize utility and scarce resources.

Limits of Macroeconomics

It is also important to understand the limitations of economic theory. Theories are often created in a vacuum and lack certain real-world details like taxation, regulation and transaction costs. The real world is also decidedly complicated and their matters of social preference and conscience that do not lend themselves to mathematical analysis.

Even with the limits of economic theory, it is important and worthwhile to follow the major macroeconomic indicators like GDP, inflation and unemployment. The performance of companies, and by extension their stocks, is significantly influenced by the economic conditions in which the companies operate and the study of macroeconomic statistics can help an investor make better decisions and spot turning points.

Likewise, it can be invaluable to understand which theories are in favor and influencing a particular government administration. The underlying economic principles of a government will say much about how that government will approach taxation, regulation, government spending, and similar policies. By better understanding economics and the ramifications of economic decisions, investors can get at least a glimpse of the probable future and act accordingly with confidence.

Areas of Macroeconomic Research

Macroeconomics is a rather broad field, but two specific areas of research are representative of this discipline. The first area is the factors that determine long-term economic growth, or increases in the national income. The other involves the causes and consequences of short-term fluctuations in national income and employment, also known as the business cycle.

Economic Growth

Economic growth refers to an increase in aggregate production in an economy. Macroeconomists try to understand the factors that either promote or retard economic growth in order to support economic policies that will support development, progress, and rising living standards.

Adam Smith's classic 18th-century work, An Inquiry into the Nature and Causes of the Wealth of Nations, which advocated free trade, laissez-faire economic policy, and expanding the division of labor, was arguably the first, and certainly one of the seminal works in this body of research.﻿﻿ By the 20 th century, macroeconomists began to study growth with more formal mathematical models. Growth is commonly modeled as a function of physical capital, human capital, labor force, and technology.

Business Cycles

Superimposed over long term macroeconomic growth trends, the levels and rates-of-change of major macroeconomic variables such as employment and national output go through occasional fluctuations up or down, expansions and recessions, in a phenomenon known as the business cycle. The 2008 financial crisis is a clear recent example, and the Great Depression of the 1930s was actually the impetus for the development of most modern macroeconomic theory.

History of Macroeconomics

While the term "macroeconomics" is not all that old (going back to the 1940s), many of the core concepts in macroeconomics have been the focus of study for much longer. Topics like unemployment, prices, growth, and trade have concerned economists almost from the very beginning of the discipline, though their study has become much more focused and specialized through the 1990s and 2000s. Elements of earlier work from the likes of Adam Smith and John Stuart Mill clearly addressed issues that would now be recognized as the domain of macroeconomics.

Macroeconomics, as it is in its modern form, is often defined as starting with John Maynard Keynes and the publication of his book The General Theory of Employment, Interest, and Money in 1936. Keynes offered an explanation for the fallout from the Great Depression, when goods remained unsold and workers unemployed. Keynes's theory attempted to explain why markets may not clear.﻿﻿

Prior to the popularization of Keynes' theories, economists did not generally differentiate between micro- and macroeconomics. The same microeconomic laws of supply and demand that operate in individual goods markets were understood to interact between individuals markets to bring the economy into a general equilibrium, as described by Leon Walras.﻿﻿ The link between goods markets and large-scale financial variables such as price levels and interest rates was explained through the unique role that money plays in the economy as a medium of exchange by economists such as Knut Wicksell, Irving Fisher, and Ludwig von Mises.

Throughout the 20 th century, Keynesian economics, as Keynes' theories became known, diverged into several other schools of thought.

Macroeconomic Schools of Thought

The field of macroeconomics is organized into many different schools of thought, with differing views on how the markets and their participants operate.

Classical Classical economists hold that prices, wages, and rates are flexible and markets always clear, building on Adam Smith's original theories.
Keynesian Keynesian economics was largely founded on the basis of the works of John Maynard Keynes. Keynesians focus on aggregate demand as the principal factor in issues like unemployment and the business cycle. Keynesian economists believe that the business cycle can be managed by active government intervention through fiscal policy (spending more in recessions to stimulate demand) and monetary policy (stimulating demand with lower rates). Keynesian economists also believe that there are certain rigidities in the system, particularly sticky prices that prevent the proper clearing of supply and demand.
Monetarist
The Monetarist school is largely credited to the works of Milton Friedman. Monetarist economists believe that the role of government is to control inflation by controlling the money supply. Monetarists believe that markets are typically clear and that participants have rational expectations. Monetarists reject the Keynesian notion that governments can "manage" demand and that attempts to do so are destabilizing and likely to lead to inflation.
New Keynesian
The New Keynesian school attempts to add microeconomic foundations to traditional Keynesian economic theories. While New Keynesians do accept that households and firms operate on the basis of rational expectations, they still maintain that there are a variety of market failures, including sticky prices and wages. Because of this "stickiness", the government can improve macroeconomic conditions through fiscal and monetary policy.
Neoclassical Neoclassical economics assumes that people have rational expectations and strive to maximize their utility. This school presumes that people act independently on the basis of all the information they can attain. The idea of marginalism and maximizing marginal utility is attributed to the neoclassical school, as well as the notion that economic agents act on the basis of rational expectations. Since neoclassical economists believe the market is always in equilibrium, macroeconomics focuses on the growth of supply factors and the influence of money supply on price levels.
New Classical
The New Classical school is built largely on the Neoclassical school. The New Classical school emphasizes the importance of microeconomics and models based on that behavior. New Classical economists assume that all agents try to maximize their utility and have rational expectations. They also believe that the market clears at all times. New Classical economists believe that unemployment is largely voluntary and that discretionary fiscal policy is destabilizing, while inflation can be controlled with monetary policy.
Austrian
The Austrian Schoo l is an older school of economics that is seeing some resurgence in popularity. Austrian school economists believe that human behavior is too idiosyncratic to model accurately with mathematics and that minimal government intervention is best. The Austrian School has contributed useful theories and explanations on the business cycle, implications of capital intensity, and the importance of time and opportunity costs in determining consumption and value.

Macroeconomics vs. Microeconomics

Macroeconomics differs from microeconomics, which focuses on smaller factors that affect choices made by individuals and companies. Factors studied in both microeconomics and macroeconomics typically have an influence on one another. For example, the unemployment level in the economy as a whole has an effect on the supply of workers from which a company can hire.

A key distinction between micro- and macroeconomics is that macroeconomic aggregates can sometimes behave in ways that are very different or even the opposite of the way that analogous microeconomic variables do. For example, Keynes proposed the so-called Paradox of Thrift, which argues that while for an individual, saving money may be the key building wealth, when everyone tries to increase their savings at once it can contribute to a slowdown in the economy and less wealth in the aggregate.﻿﻿

Meanwhile, microeconomics looks at economic tendencies, or what can happen when individuals make certain choices. Individuals are typically classified into subgroups, such as buyers, sellers, and business owners. These actors interact with each other according to the laws of supply and demand for resources, using money and interest rates as pricing mechanisms for coordination.

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Everything You Need to Know About Macroeconomics

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Macroeconomics is a branch of economics that studies how an overall economy-the market systems that operate on a large scale-behaves. Macroeconomics studies economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment. Some of the key questions addressed by macroeconomics include: What causes unemployment?

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This website talks about what microeconomics are, understanding microeconomics, the uses of microeconomics and the methods of microeconomics.

What Is Microeconomics?:

Microeconomics is the study of how decisions and incentives influence the utilization and distribution of resources. It explores the values of goods, efficient production and exchange, and coordination among individuals. Unlike macroeconomics, microeconomics provides a more detailed understanding.

Understanding Microeconomics:

It predicts outcomes based on individual choices responding to changes in incentives, prices, and resources. Microeconomic groups, including buyers, sellers, and business owners, impact resource supply and demand through pricing mechanisms like money and interest rates.

The Uses of Microeconomics:

Microeconomics has practical applications in positive and normative contexts, explaining economic behavior under changing conditions and assessing the impact of policies.

Method of Microeconomics:

The historical methods of microeconomics, such as general equilibrium and partial equilibrium theories, contribute to neoclassical microeconomics. This branch emphasizes rational choices within income and resource constraints, using simplified assumptions to model economic behavior.

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What Is Microeconomics?

Microeconomics is the social science that studies the implications of incentives and decisions, specifically about how those affect the utilization and distribution of resources. Microeconomics shows how and why different goods have different values, how individuals and businesses conduct and benefit from efficient production and exchange, and how individuals best coordinate and cooperate with one another. Generally speaking, microeconomics provides a more complete and detailed understanding than macroeconomics.

Understanding Microeconomics

Microeconomics is the study of what is likely to happen (tendencies) when individuals make choices in response to changes in incentives, prices, resources, and/or methods of production. Individual actors are often grouped into microeconomic subgroups, such as buyers, sellers, and business owners. These groups create the supply and demand for resources, using money and interest rates as a pricing mechanism for coordination.

The Uses of Microeconomics

Microeconomics can be applied in a positive or normative sense. Positive microeconomics describes economic behavior and explains what to expect if certain conditions change. If a manufacturer raises the prices of cars, positive microeconomics says consumers will tend to buy fewer than before. If a major copper mine collapses in South America, the price of copper will tend to increase, because supply is restricted. Positive microeconomics could help an investor see why Apple Inc. stock prices might fall if consumers buy fewer iPhones. Microeconomics could also explain why a higher minimum wage might force The Wendy's Company to hire fewer workers.

These explanations, conclusions, and predictions of positive microeconomics can then also be applied normatively to prescribe what people, businesses, and governments should do in order to attain the most valuable or beneficial patterns of production, exchange, and consumption among market participants. This extension of the implications of microeconomics from what is to what ought to be or what people ought to do also requires at least the implicit application of some sort of ethical or moral theory or principles, which usually means some form of utilitarianism.

Method of Microeconomics

Microeconomic study historically has been performed according to general equilibrium theory, developed by Léon Walras in Elements of Pure Economics (1874) and partial equilibrium theory, introduced by Alfred Marshall in Principles of Economics (1890). The Marshallian and Walrasian methods fall under the larger umbrella of neoclassical microeconomics. Neoclassical economics focuses on how consumers and producers make rational choices to maximize their economic well being, subject to the constraints of how much income and resources they have available. Neoclassical economists make simplifying assumptions about markets-such as perfect knowledge, infinite numbers of buyers and sellers, homogeneous goods, or static variable relationships-in order to construct mathematical models of economic behavior.

These methods attempt to represent human behavior in functional mathematical language, which allows economists to develop mathematically testable models of individual markets. Neoclassicals believe in constructing measurable hypotheses about economic events, then using empirical evidence to see which hypotheses work best. In this way, they follow in the "logical positivism" or "logical empiricism" branch of philosophy. Microeconomics applies a range of research methods, depending on the question being studied and the behaviors involved.

Basic Concepts of Microeconomics

The study of microeconomics involves several key concepts, including (but not limited to):

Incentives and behaviors: How people, as individuals or in firms, react to the situations with which they are confronted.

Utility theory: Consumers will choose to purchase and consume a combination of goods that will maximize their happiness or "utility," subject to the constraint of how much income they have available to spend.

Production theory: This is the study of production-or the process of converting inputs into outputs. Producers seek to choose the combination of inputs and methods of combining them that will minimize cost in order to maximize their profits.

Price theory: Utility and production theory interact to produce the theory of supply and demand, which determine prices in a competitive market. In a perfectly competitive market, it concludes that the price demanded by consumers is the same supplied by producers. That results in economic equilibrium.

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Microeconomics Definition, Uses, and Concepts

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Microeconomics is the social science that studies the implications of incentives and decisions, specifically about how those affect the utilization and distribution of resources. Microeconomics shows how and why different goods have different values, how individuals and businesses conduct and benefit from efficient production and exchange, and how individuals best coordinate and cooperate with one another.

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This website also talks about the differences between macroeconomics and microeconomics.

Microeconomics concentrates on individual behaviors and decisions within constraints like scarcity. It examines why goods have different values, ways to enhance production efficiency, and how individuals collaborate. Actors in microeconomics are buyers, sellers, or entrepreneurs, their behaviors contrasted against models to predict real-world outcomes.

On the other hand, macroeconomics focuses on the overall economy rather than individual markets. It's vital for governments, analyzing long-term effects of major decisions and striving for stable economic growth through fiscal policies. Key indicators, including GDP, interest rates, inflation, and unemployment, gauge progress.

The main differences between the two lie in their scopes: macroeconomics addresses wide-scale economic concerns at the national or global level, while microeconomics focuses on individual entities and smaller-scale decisions. Despite these differences, both fields influence each other significantly—the small-scale decisions in microeconomics can impact the broader economy, while federal policies affect individual consumers.

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Economics is a popular college degree and can be an excellent career path. As you begin to explore this field, you may be surprised to discover that it involves several branches and niches. Two of the most influential include macro and microeconomics. Both are necessary at the individual level and for large-scale decision-making. Below, we'll explain how these branches differ and why it's worth studying both as you prepare for a career you'll love.

Calculate a better future for yourself and others with an undergraduate or graduate degree in economics from Central Michigan University.

What is microeconomics?

Focused on individual actions and behaviors, microeconomics determines how people, their families (and the businesses they lead) make decisions amid scarce resources or other constraints. These seemingly small-scale decisions often occur in response to larger trends or concerns, such as the availability of new incentives or developments regarding production. Through a close study of microeconomics, we can better understand:

Why specific goods are valued differently.

How goods can be more efficiently produced and exchanged.

What it takes for individuals to cooperate and collaborate.

The individual actors involved in microeconomics may be categorized as buyers, sellers, or entrepreneurs. Their behaviors and actions may be closely observed and contrasted against models to determine what might happen in the real world.

What is macroeconomics?

Emphasizing the entire economy, macroeconomics delves into broad trends rather than focusing on individual markets. This practice is crucial for government entities, as it reveals how major decisions could play out not only in the immediate future but also on a long-term basis. This branch aims to produce stable economic growth through solid fiscal policies. Progress toward this objective is measured based on key economic indicators, such as:

Gross domestic product.

Interest rates.

Inflation.

Unemployment.

Microeconomics vs. macroeconomics: main differences

The key differences between macro and microeconomics are built right into these descriptive terms. 'Macro' refers to the big picture - wide-scale economic concerns that play out at the federal or even international level. From gross domestic product (GDP) to inflation and unemployment, macroeconomics emphasizes the broad trends that have global implications.

Micro, as its name implies, focuses on smaller (albeit just as important) concerns that involve individual people, families, or entities. While microeconomics' focus may go as broad as an entire industry, it typically does not rise to the level of national policies - although these can drive the individual decisions that form the basis of microeconomics.

While there are many significant differences between macro and microeconomics, it's important to remember that both fields are equally important and have a huge impact on one another. The individual decisions and practices that seem to play out on a small scale with microeconomics can ultimately shape the broader economy. Similarly, decisions made at the federal level will impact the individual consumer.

Why study economics?

While it's important to understand the many similarities and differences between the various branches of economics, there's no denying that economics, in general, is a hugely influential field that warrants close study. Both types of economics can shape fiscal policies and drive key business decisions.

At the broad level, we need greater expertise in economics to ensure that tomorrow's leaders make prudent decisions that benefit not only their own bottom line but also the overarching economy. On a personal level, economics is a valuable area of study that provides numerous academic and professional benefits. Key considerations include:

Economics is part of everyday life

Economics plays into every decision you make, no matter how small it may seem. This is especially evident when you study microeconomics and behavioral economics, which reveal the wide range of factors that shape your daily life. Core concepts offer insight into how you allocate your time, interact with loved ones, and make decisions that benefit your general health and well-being.

Similarly, a detailed understanding of macroeconomics can help you make sense of the world around you. While you'll have less control over wide-scale economic concerns, you can at least anticipate new developments and plan your financial strategy accordingly. Similarly, a basic grasp of macroeconomics will help you spot cyclical trends, allowing you to take comfort (or, when necessary, take action) when new economic challenges arise.

Prepare for graduate school

No matter your personal career aspirations, studying economics at the undergraduate level will give you a solid foundation for future academic and professional pursuits. This is a popular bachelor's degree among all types of students, including those with both technical and management-oriented goals. Meanwhile, graduate program admissions look favorably on applicants with economics degrees.

As you take economics courses, you'll also gain problem-solving skills vital for the GRE or the GMAT. Later, you'll be thoroughly prepared for the high-level research you encounter in graduate school.

Learn skills to help your career

You may plan to jump straight into your career after graduation. If so, you'll need to demonstrate the targeted skills that matter to today's demanding employers. Currently, your chances for professional success are greatest if you possess a blend of technical and soft skills. A Bachelor of Science in Economics can deliver the following essentials:

Quantitative analysis

Business communication

Collaboration

Problem-solving

Decision-making

Gain perspective on global issues

News headlines can sometimes be confusing and downright distressing at times, but they make a lot more sense when grounded in economic theory. As we've discussed, a basic understanding of macroeconomics can provide both insight and comfort when the world around you seems chaotic. Often, however, this understanding extends beyond strictly economic concerns. Topics that make more sense upon studying economics include national security and immigration.

What you will learn in economics classes?

Both macro and microeconomics classes help you gain in-depth knowledge and a variety of important skills. These courses center around various economics concepts, such as:

Aggregate expenditure

Equilibrium output

Federal Reserve

National income accounting

Opportunity cost

Supply and demand

Should you take micro or macroeconomics first?

When determining your college trajectory, microeconomics vs. macroeconomics can feel like a chicken or egg scenario. Both introductory courses are important - and both should be taken early on. Many students prefer to take microeconomics first because it feels more applicable to their daily lives, so the concepts should be easier to grasp.

To that end, the Central Michigan University (CMU) major map for both the Bachelor of Arts and Bachelor of Science in Economics begins with microeconomics during the first semester and continues on to macroeconomics during the second semester. Both courses are prerequisites for nearly all other economics classes. Later on, the original order is reversed: an intermediate course in macroeconomics is recommended during the fourth semester, followed by intermediate microeconomics during the fifth semester. These are only recommendations; ultimately, the best path will be determined with help from an academic advisor.

Economics at CMU: your ticket to a bright future

At CMU, we offer a wide variety of economics programs designed to prepare you for success in both academia and the professional world. At the undergraduate level, this includes both business and non-business  economics majors. Meanwhile, our  master's degree  can function as a wonderful stepping stone for top doctoral programs. Contact us today to learn more about these and other opportunities.

The views and opinions expressed in these blog pages are strictly those of the page author.

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Microeconomics vs. macroeconomics: how they differ and why both are essential

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We discuss how two of the most influential niches of economics - macro and microeconomics - differ and why it's worth studying both as you prepare for a career you'll love.

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This text explores the division between microeconomics and macroeconomics within the field of economics.

Macroeconomics focuses on the overall functioning of the economy, analyzing phenomena like employment, GDP, and inflation at the national level. In contrast, microeconomics examines the interactions of supply and demand in individual markets for goods and services. This division became institutionalized in economics, with scholars identifying as either microeconomists or macroeconomists.

The historical context reveals that until the Great Depression, economics was considered a unified field studying the organization of production, distribution, and consumption. The severe economic collapse during the Great Depression prompted the emergence of macroeconomics, with John Maynard Keynes as a foundational figure. Keynes introduced the study of aggregate variables and the simultaneous equilibrium in markets for goods, labor, and finance, challenging the traditional assumption of market equilibrium.

Microeconomics is rooted in models of individual consumers and firms, assuming perfect market clearing conditions. In contrast, macroeconomics addresses the instability of aggregate variables, such as national income and overall price levels. The two fields coexist and complement each other, with microeconomics focusing on individual behavior and macroeconomics dealing with large-scale economic relationships.

The website also discusses efforts to bridge the micro/macro divide, with attempts to develop microeconomic foundations for macroeconomic models. Despite ongoing progress, macroeconomics, especially during the global financial crisis of 2008, faced challenges in improving models and addressing market instabilities. The distinction between microeconomics and macroeconomics is underscored, highlighting their different theoretical systems and historical development. The text concludes by acknowledging the significance of econometrics, which applies statistical and mathematical methods to economic analysis and is considered a core area alongside microeconomics and macroeconomics in the field of economics.

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Economics is split between analysis of how the overall economy works and how single markets function

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This image shows how factors that are studied in both macroeconomics and microeconomics usually have an impact on one another. For example, the level of joblessness in the overall economy affects the availability of workers that a company can hire.

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This image has the word microeconomics written in the middle and words that relate and correspond to microeconomics around it. For example:

Supply and demand: Microeconomics examines the behavior of individual markets and agents. The principles of supply and demand are fundamental to understanding how prices are determined in specific markets.

Monopoly: In microeconomics, the study of market structures is crucial. Monopoly is a market structure where there is a single seller dominating the market, and microeconomics explores the effects of such market structures on prices, output, and consumer welfare.

Elasticity: Microeconomists use elasticity to measure how sensitive the quantity demanded or supplied of a good is to changes in price. This is crucial for understanding consumer and producer behavior at the individual level.

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economics monopoly market graph perfect competition diagram demand elasticity infographic clipart

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1. Surprising discoveries: What caught me off guard the most was realizing how closely linked microeconomics and macroeconomics are. Initially, I thought they were separate things, but I learned that understanding how individual people and businesses make choices (micro) is crucial to grasping the bigger picture of how economies work overall (macro). It's like putting together a puzzle where all the pieces, big and small, fit together.

2. Real-life example: Think about a small business owner – someone running a local shop. On the small scale, their pricing, hiring, and other choices affect how well their business does. But on the bigger scale, things like inflation, interest rates, and government rules also play a role. Seeing how these small and big factors mix in the daily running of a business shows how important economics is in real life.

3. Main point for family or friends: If I had to share the most important thing with a family member or friend, it would be how the everyday choices we make connect with what's happening in the economy around us. Whether it's managing money or thinking about a career, our decisions matter not just for us but also for the bigger economic picture. Knowing this helps us make smarter choices and understand what's going on in the economy. It's like knowing how the pieces of a game fit together so you can play better.