Have you just gained admission into college to study business, government, or any other course with economics as a major part of its syllabus? You’ll definitely meet two main branches of economics (microeconomics and macroeconomics) at different points of your study. Both are parts of economics, but they focus on different concepts, and their scope differs. Thus, it makes sense to understand both branches of economics, their differences, and how they affect your study before starting any.
If you’re stuck between choosing one among the two, here’s an article explaining everything you should know about both branches, including which you should choose first in case your school does not provide a guideline to help you choose. However, for starters, let’s review the differences between both concepts.
Difference Between Macroeconomics and Microeconomics
Difference Between Macroeconomics and MicroeconomicsWhen it comes to choosing which aspect of economics to major in, the first step is understanding the key differences between the two components. Despite the interdependence between both, there are still several differences worth knowing. Here, let’s review some of them.
Definition
Microeconomics is a branch of economics that studies individual, household, and firm behavior regarding decision-making and resource allocation. On the other hand, macroeconomics is a branch of economics that studies the aggregate economic behavior and performances of a people.
Factors
The most important factor studied in microeconomics is the demand and supply of goods and services, tax and regulations, etc However, the most important factors in macroeconomics include gross domestic product (GDP), inflation, unemployment, growth rate, etc.
Scope
Microeconomics studies a particular market segment, while macroeconomics studies the whole economy from a broader perspective, covering several market segments.
Significance
The significance of microeconomics is most felt in its ability to regulate the market prices of goods alongside factors of production in an economy. On the other hand, macroeconomics preaches stability in broad price levels, thus, solving the main issues of an economy like inflation, deflation, reflation (rising prices), unemployment, and poverty as a whole.
Limitations
The whole concept of microeconomics is based on some impractical presupposition. For example, proponents of microeconomics presume that the economy has full employment, which is not feasible. On the other hand, the critics of macroeconomics have scrutinized it and found that its foundation, which incorporates composition, maybe a misconception. Because what is true for the aggregate economy may not always be true for individuals and vice versa.
Real-world example
To help you better understand the difference between microeconomics and macroeconomics, here are real-world examples of both.
- Microeconomics: if Francis, a young, motivated entrepreneur, decides to own a bakery, all the decisions he’ll make about his bakery would be microeconomic decisions because Francis will only consider the immediate cost of decisions and their benefit to him before making them. The same goes for every entrepreneur because their journey is filled with decisions only targeted at their businesses.
- Macroeconomics: in the last two months of 2017, the US experienced a 0.7% income growth, leading to a rapid increase in aggregate demand. To understand how exactly the income increase affected aggregate demand and how far the increase in demand will affect the overall economy, economists need to apply macroeconomic policies because it is a macroeconomic case.
Which Should You Take First: Microeconomics or Macroeconomics
When determining your college trajectory, one of the first questions that will come to mind is which you should take first between microeconomics and macroeconomics. Both introductory courses are equally important for beginners who want to build the right foundation in economics. Why? Because both branches of economics complement each other, and you need an understanding of one to handle the other. Yes, microeconomics focuses on individual agents, while macroeconomics studies the whole economy, focusing on issues like economic growth, inflation, and unemployment. You can’t understand the broad economy without understanding how individual actions affect it and vice versa. Thus, it’s safe to say that, together, microeconomics and macroeconomics provide a comprehensive understanding of how the economy works. However, we often see students choosing to study microeconomics first because its application in our daily lives makes it easier to understand. To that end, most universities include microeconomics as the first step for students that want to major in economics before continuing with macroeconomics.
Both courses are typically indicated as prerequisites for most economics courses. But by studying microeconomics first, you can learn the principles of economics from an individual perspective before moving to its application in the wider society. However, there are still a few proponents of macroeconomics that will argue for the principles of economics to be understood by being seen in practice – that is, students must grasp the financial system before they can understand economics as a topic.
There can also be instances where a university decides to merge both subjects into one unit, thus relieving you of the burden of choice between the two. Irrespective of how your school decides to arrange them, note that both courses will help you learn the basics and set you on the right path to excel in your fields.
In the end, we advise starting with microeconomics before moving on to macroeconomics. However, if you want to do just one and not two, choose the one that you find most exciting.
Which is Easier Between Macroeconomics and Microeconomics?
One question we often see on educational forums is “Micro vs. macroeconomics, which is easier?” The truth is that this is not exactly a relevant question at the entry-level. It’s usually important to take both from the start before choosing what suits your ability in the long run. However, that doesn’t invalidate the point that one’s more difficult than the other. Students who do not major in economics may find macroeconomics easier because beginner-level macroeconomics is usually a combination of everyday definitions and a mix of Keynesian theories here and there. The exception is people with a low tolerance for handwaving topics because you’ll encounter some in macroeconomics.
However, things will change as you get to the advanced level. Macroeconomics typically becomes more difficult because the mathematics used to explain advanced macro theories incorporate upper-level mathematics that may seem strange to the average person. This can include advanced matrix algebra and set theory.
On the other hand, microeconomics will also be quite intense, but it becomes more of an “exact science” as you progress. At this point, you’re learning how to analyze specific problems that specific firms encounter, so it becomes more about model application than the study of abstract theories.
Can You Take Microeconomics and Macroeconomics Simultaneously?
No economics law bans taking micro and macroeconomics at the same time. However, when students ask questions like “can you take micro and macroeconomics at the same time?” They do so because they’re genuinely concerned about how it’ll affect their performance. Both courses cover different types of problems and, ultimately, different levels of analysis. However, the similarity of certain concepts in both can make it easier to read and prepare for both subjects at the same time.
Ultimately, it boils down to students’ preference and how a college structure their program. Students can choose to take microeconomics topics before macroeconomics or vice Versa. They can also choose to take both courses simultaneously in one semester.
One study examined the direct effect of taking both courses simultaneously by interviewing 860 students of the College of Business at the University of Arkansas. The study showed that optimal sequencing involves taking the two principles of economics classes concurrently. The second best sequence involved having students take the principles of microeconomics before taking the principles of macroeconomics.
Wrapping Things Up Micro vs. Macro Economics: Which Class Should You Take First?
If you’re a high school student looking to major in economics, you’ll face a few difficult decisions. One will be which you should do first between microeconomics and microeconomics. It boils down to carefully reviewing the benefits of taking micro and macroeconomics. Of course, some schools, districts, and states may decide for you at the early level. However, if they don’t, we recommend taking microeconomics first before moving to macroeconomics. But it boils down to your preference and what you want to achieve. Whichever you choose, you’ll still need to work hard and study well to do well in it.
