Microeconomics deals with an individual economic situation or one that is localized in time. It is also sometimes used interchangeably with macroeconomics.
Microeconomics has a much wider scope than macroeconomics in the sense that it can encompass both short-term and long-term conditions. It can include a variety of factors such as demand, production, supply, competition, pricing, the distribution of resources, and institutions such as money and banking.
The term macro refers to a study of a specific economic problem or issue that is long term in nature and involves both short term and long term solutions. This is sometimes referred to as long term economic policy or long-term macroeconomic policy.
A macroeconomic analysis can be useful for determining the best course of action for improving the economic system. Many macroeconomic studies provide data that is used to make important decisions such as setting the interest rate for a government loan, establishing a tax policy, or designing a plan for reducing the effects of a problem on the overall economy.
Macroeconomists often make assumptions about the future that are not always correct, which is why they often require a certain amount of uncertainty in their findings and conclusions. Microeconomists can make assumptions about the future that are usually more accurate.
Macroeconomists often view the world through a different lens than those that are employed by most microeconomists. They often look at things from the perspective of a central planner, trying to determine how to balance the distribution of goods and services within the larger system. This is very different from the approach that most microeconomists take.
Macroeconomists typically deal with both domestic and international issues, while most microeconomists only deal with local ones. This has many advantages such as the ability to develop solutions quickly in the face of economic situations.
Macroeconomists tend to focus on the long term rather than the short term. In some ways this is due to the fact that a macroeconomist cannot be as easily affected by short-term market fluctuations and economic crises that can occur. It is possible to have a macroeconomic crisis and the impact on the macro economy can be quite devastating. This may lead to a temporary change in policy or a reduction in spending in the short run, but long term the changes may result in greater stability.
Microeconomists tend to have a shorter time horizon and focus on the current economy. They use the data that they collect to help determine what the future will hold, whether that future will be positive or negative.
Most macro economists are employed in academia, governmental agencies, and think tanks. Many microeconomists work for businesses, nonprofit organizations, and individuals. Some have even started their own private sector firms or work in consulting or finance.
Because the United States is a highly regulated economy, most macroeconomic policies are put into place by government officials who have knowledge and expertise in that particular area. If this is not possible, the policies are often developed through committees that are made up of other economic experts.
In macroeconomics, macro is the name for all the factors that affect the economy and how they affect each other. In micro it is the name for the factors that influence the economy from the small scale to the large scale. Both are important in determining the course of action that can be taken to improve the economy.