Whereas macro economics looks into the national level through its examination of the structure of the economy, microeconomics look into the character of the individual firms and individuals at the level of the microeconomy. This is because micro economies are usually very closely related to one another and micro decisions, if taken by the individuals within that economy, have effects on the national economy in the form of aggregate demand, aggregate supply, and interest rates. The microeconomics thus provides a very valuable input to the macro-economic analysis of the state of the economy. Thus micro economics helps us understand the changes that take place within the economy, and how these changes affect the various sectors or components of the economy.
There are many topics in which the micro and macro aspects come into play. One of the most important micro topics is the business cycle. In this micro subject, the study of business cycles helps us understand how the fluctuations take place in the economy. For example, a business cycle is characterized by a series of ups and downs in the rate of inflation, employment, and portfolio balance over a period of time. The ups and downs in the business cycle cause monetary disturbances in the economy. For instance, an expansion in business activity causes a rise in aggregate demand, which leads to a rise in price of goods and services.
Another important area of microeconomics is the national income determination. Here, the determination of national income is done taking into consideration the output of the nation’s economy. Micro topics in economic analysis therefore also include the scope of international trade. International trade involves trade within a nation as well as between nations. Thus, it also forms an important topic in macroeconomics.
One of the more interesting areas of microeconomics is the micro-political economy. Micro-political aspects in the macro economy include the impact of legislation, regulation, and policy on the size of the economy, as well as its distribution. Micro-economic analysis thus helps us understand the policies adopted by the national government towards economic growth, budget deficits, inflation, and consumption based on individual consumption preferences.
The study of micro-economic policy-related issues is important for the macro-economy as a whole, but is especially critical in the United States. In particular, it has been a concern of economists for decades given the fact that the US economy rests largely on the strength of the activities of its consumers. Thus, micro problems affecting the US economy have, up until recently, been relatively insignificant when compared to the macro problems that affect international trade and overall economic stability.
Micro-economic topics are usually dealt with in the introductory chapters of economic textbooks. However, as the number of micro topics grows, the scope of these chapters becomes less. Consequently, it is becoming necessary for many students to seek information outside the classroom as well as in other forms of literature. Fortunately, the Internet makes this task much easier. There are many sites that provide articles on micro topics that are relevant to the student’s studies.
In addition, many books dealing with microeconomics are written on their own personal experiences and describe micro-level issues as well. Thus, students can benefit by learning about what they are dealing with in everyday life through such personal literature. The Internet also provides many websites that give a glossary and list of micro topics. Such sites make it easy for students to familiarize themselves with a wide range of micro-topics as well as macroeconomics. In so doing, they will be prepared to apply microeconomics in the workplace.
