November 17, 2007
Unit 1 IP
Ladies and gentlemen, today, I would like to discuss the major differences between
microeconomics and macroeconomics and how both these fields of study impact and
influence decisions made by me in the work and home environments.
Microeconomics is the study of decisions that people and organizations make
regarding the allocation of scarce resources and prices of goods and services (Perloff,
2007). Microeconomics focuses on the patterns of supply and demand and the
determination of price and also output in individual markets. These decisions are also
influenced by government. It is the smaller or micro picture of economics at the
individual, household and company level.
Macroeconomics is the bigger picture of economics. It studies the aggregate or
combined impact of certain consequences such as inflation, unemployment and economic
growth that were the result of social decisions in both the public and private sectors. It
examines whole economic systems and the interaction of the different areas such as
inflation and unemployment.
An example of a microeconomic phenomenon is the impact of a change in the price of
a good or service on the spending decisions of a household. Also changes in the
unemployment rates will influence a decision to stay or leave a present position.
Examples of macroeconomic phenomenon include looking at changes in interest rates,
employment and unemployment numbers, government economic policies and trade on
I would like to discuss an example of a microeconomic decision that was made in
the home environment. The decision was to file bankruptcy and relieve ourselves of large
amounts of debt incurred because of medical expenses due to infertility issues. One factor
was our decision to have my wife leave work to stay at home with our children. This
eliminated a source of income for us but...