Macro-Economics

Macro-economics, the other half of economics, is the study of the behavior of the economy as a whole. In other words, macroeconomics deals with total or big aggregates such as national income, output & employment, total consumption and the general level of price.

In the words of Boulding:
"Macroeconomics deals not with individual quantities as such but with the aggregates of these quantities, not with individual income but with the national income, not with individual prices but with the price level, not with individual outputs but with the national output."

Macro analysis is helpful in understanding the functioning of economic system because one individual's economic study is not helpful for framing any policy, hence whole economy's study and its analysis is important.

Micro-Economics

Micro-economics is that part of economic analysis which studies decisions of individuals and firms in economy. Microeconomics is the study of specific individual units, particular firms, particular households, individual prices, wages, income, individual industries, particular commodities etc.

In the words of Samuelson:
"In microeconomics we examine among other things how individual prices are set, consider what determines the prices of land and capital and enquire into the strength and weakness of market mechanism."

Microeconomics explains how consumers and producers take their decisions regarding allocation of productive recourses among various goods and services.