AP Macroeconomics

What is the difference between macroeconomics and microeconomics?

2 min read•july 11, 2024

Economics is a field that is divided into two subdivisions in the AP curriculum: macroeconomics and microeconomics.

There are thus two exams you can potentially take: AP Macroeconomics and AP Microeconomics.

Definitions 📖

Microeconomics deals with the impacts of individual economic decisions
Macroeconomics deals with the impacts of aggregate (total) economic decisions.
Specifically, microeconomics deals with individual firms, households, products, prices, wages, etc, while Macroeconomics deals with national income, GDP, price level, etc.
Macro is the big picture: GDP, inflation, unemployment- Take a look at this blog to learn more about GDP and how to calculate it
Micro is the zoomed in: individuals, markets, firms and structures
Interested in learning about Micro? sStart with this explanation on Supply and Demand

For example, when determining the right wage to pay workers in your factory you use the microeconomic factors of marginal revenue product and demand.
Similarly, when determining the GDP of a country you use the macroeconomic factors of consumer expenditure, government expenditure, net investment, and net exports.

Some economic principles are present in both the study of Macroeconomics and Microeconomics
These are known as the basic economic principles and include the principles of scarcity, opportunity cost, comparative and absolute advantage, the production possibilities curve, etc.
Macroeconomics and microeconomics work TOGETHER - they are not two completely separate fields

Macroeconomics and Microeconomics have different focuses, but one must learn both to understand the economy as a whole.