Micro Versus Macro Economics

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Marc Schwind

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

global economies.
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...
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