The Age-Old Question
Microeconomics vs Macroeconomics - Which Class Should I Take First?
When you're just beginning your studies in economics, you'll quickly come across two very important branches – microeconomics and macroeconomics. It's highly likely that you'll study both at some point during your degree, as they are two of the foundational planks of the subject. It is also likely, however, that you will have to choose which to take first, prompting the question: which is the best theoretical starting point for your studies? Having just started out this can be a tough question to answer. That's why we're going to give you a little run down of each, to help you make the most informed decision possible. So let's begin.
What's the difference between macroeconomics and microeconomics?
Before making any decisions about which classes to take, you need to understand what each subject refers to. Microeconomics is the study of economic systems on a small scale – meaning it is about the way in which economic theories play out when they are applied to an individual, a group, or a company. Macroeconomics, on the other hand, looks at the entire economy of countries or of the world. For example, microeconomics in practice would include the study of supply and demand for a particular product or service, or examination of how a particular piece of legislation would effect a business which operated in that area. Macroeconomics, on the other hand, examines economics on the larger scale, seeing how economic theories apply to governments and international organisations such as NATO. Examples of the kind of topics studied in macroeconomics would include the gross domestic product of a country, or the economics of imports to and exports from a country.
Both micro- and macroeconomics deal with similar issues, but on different levels. In fact, the same topics of study can be relevant to both subjects. Consider, for example, the cost of living in a particular area, and its relation to inflation. This is related to microeconomics – because it's about how much people have to spend on housing, food, entertainment and so on – and can therefore be described on the individual level. But it's also an important topic in macroeconomics, as inflation is affected by things like interest rates, which are, in part at least, set by the state. It can therefore also be analysed on the national level as a subject of macroeconomics.
The relevance of microeconomics and macroeconomics to economics in general
The two fields are often connected then: investigating the microeconomic parts of something often reveals important clues about the macroeconomics, and vice versa. One rough way of thinking about this is that microeconomics is 'bottom up', looking at how individual choices affect economic systems, while macroeconomics is 'top down', looking at how economic systems affect the people living within them. In order to understand a complex economic issue such as how and when a state should adjust interest rates, you need to understand the basic principles of supply and demand and the way in which people make economic decisions, which would be microeconomics. Then you would need to understand how these principles apply to monetary systems and the financial market, and how the economy of a country fits into the international economic system, which would be macroeconomics.
Another factor is that in microeconomics, there is little in terms of competing schools of thought; that is to say, economists generally agree on the principles. The same, unfortunately, can't be said for macroeconomics, the definition of which has changed several times - and often drastically - since its inception. Debate is still strong when it comes to macroeconomic principles and especially in terms of forecasting. This can sometimes make it a more challenging, if perhaps more intellectually stimulating, area of study.
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Should you take microeconomics or macroeconomics first?
Taking into account all of the above, most economics students are better off studying microeconomics first, and then progressing on to macroeconomics. That way, the principles of economics can be learned on an individual level, before being applied to the wider society and world. However, some would argue the principles of economics are better understood if first seen in practice – as in, first one must understand the financial system in order to make any sense of economics as a topic. These people would argue it can be helpful to study macroeconomics before microeconomics.
Your university may also roll both subjects into one unit such as an Introduction to Economics course, removing any need, on your part, to make a choice at all. In all likelihood, any of these options will allow you to learn what you need to progress in your economics studies, but in general, most students will opt to begin with studying microeconomics first. And in most cases, it is the safest bet.
A final point would be that microeconomics is generally more mathematical than macroeconomics. However, there will maths involved in macroeconomics, meaning having the mathematical foundation from microeconomics may be useful. In the end, if you're planning on taking both it may be worth studying macroeconomics initially. However, if you're only planning on taking one of the two – which is a rather unusual position to be in – pick whichever you find more interesting.
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