What causes one country to prosper and grow while other countries, with similar resources, remain poor? What causes unemployment? How much of a country's wealth should be spent on government programs such as defence, welfare, and education?
These and other similar questions are the subject of macroeconomics. Macroeconomics is the study of the nation's economy as a whole. Macroeconomics can be a fascinating subject to study, because it looks at such important issues as whether or not taxes should be raised, the problems of inflation and depression, and much more.
Microeconomics
What happens to the price of corn when there is a drought in the Midwest? What happens to the supply of farm products when the government subsidizes farmers or keeps farm prices artificially low? What is the impact of income taxes versus value-added taxes on consumers? How does one determine the value of leisure time? These and other similar questions are the subject of microeconomics. Microeconomics is the study of the behaviour of people organizations in particular markets. It looks at how prices are determined and how people and business respond to changes in the market (for example, changes in the demand for and supply of products).
Microeconomics can also be challenging to study because it teaches principles that can be used in everyday buying and selling transactions with others.
Jones came home one evening and found his wife crying. "What's the matter, darling?" he asked anxiously.
Still crying, she explained that the cat had eaten all the cakes she had made that morning.
"Never mind, old dear," he said kindly. "A shall get you another cat tomorrow."