Macro and Micro Economics

The United States economy is the largest in the world. Approaching 350 million people, the United States population is reliant upon the economy, which consequently can affect the lives and fortunes of all its citizens. Furthermore, with the increasing ties between the international community i.e. globalization, the United States economy also affects hundreds of millions of foreigners as well. Economists in Washington D.C. are tasked with managing the economy for the public good. Although the United States economy is a Free Enterprise System, there are tools used by the government to manage economic growth. This division is called macroeconomics.

Economists evaluate the economy on differing levels. Macroeconomics is a division of the economics discipline that evaluates entire economies as a whole. For example, the approach taken by John Maynard Keynes, an English economist, in the 1930's, sought to explain why the economies of the English-speaking democracies entered a prolonged depression. The purpose of his study was to find the reasoning behind why the Great Depression occurred and how to avoid something similar in the future. Keynes' research and proposed policies operated at the macroeconomics level since it was focused on entire economies.

On the other hand, economics is divided into another discipline called microeconomics. Microeconomics seeks to define behavior at the individual consumer, household or family, and small business levels. For example, the study of how families in rural a community purchase meat products in the winter is an example of a study at the microeconomics level. Studying demand and supply in a business setting also is in the realm of microeconomics.

Both the study of macroeconomics and microeconomics gives economists an understanding of how best to manage economic activity at both levels for the public good and for profit. Macroeconomists uses tools such as the Gross Domestic Product, a total value of all goods and services produced in an economy in a given time period, and the business cycle, the growth and decline of an economy over a time period, to effectively manage policies which affect the economy overall. However, micro-economists will utilize figures such as local employment rates, production quotas relating to applied technologies, or advertising strategies to modify business practices to increase profitability. Both types of economic views are a study in how best to proceed in an economic system.