Difference between Microeconomics and Macroeconomics - Essay Example

In reality, it is a lot more complicated than that. Microeconomics is to do with the market’s supply and demand factors that establish the price levels of an economy (“Difference”). Macroeconomics is similar to this except that it deals with a country’s GDP, trade figures, and unemployment rates (“What’s”). These two economic principles go hand-in-hand because they complement each other. For example, the purchasing decision of an individual consumer would affect the greater country as a whole, no matter how big or small.

Looking at it from the other perspective, a macroeconomic decision taken by a government will affect the spending habits of a single consumer. Microeconomics is largely to do with the prices of regular goods and services and how they affect a market. If a market is not doing so well, maybe the prices of goods and services need to be lowered. On the other hand, if the economy is doing above average, maybe the prices of goods and services need to be raised. This is largely due to the need to control inflation, which has more to do with macroeconomic decisions (Fox). Macroeconomics is concerned with economic growth and the discrepancies in national income, or GDP (“Difference”).

An example of an economic decision that I could make would be the purchase of some new running shoes. If the price is too high, then I will put off my decision to purchase a new pair. Alternatively, I could look for another pair that is cheaper and more in my price range. Before making the final purchasing choice, I would find a selection of running shoes and evaluate of pair based on its pros and cons. Factors that I would consider in making my choice would be price, followed by quality. Ultimately, my final choice would come down to the best pair of running shoes that I could buy in terms of durability and how comfortable the shoes are.

An example of a macroeconomic decision that has affected me has been the raising of the minimum wage level. When a government chooses to raise the minimum wage, a consequence of this is an increased unemployment rate. If I was a student and was working a part-time job then it may be possible that I would lose my job. Because the amount of wages that have to be paid by employers goes up, they have no choice but to cut down on the number of workers to maintain the same amount of wages. Read More