A First Look at Economics
4. Microeconomics and macroeconomics

Scarcity, opportunity cost, and choice is not all there is, but these three concepts give economists license to explore a pretty wide range of subjects. The Department of Economics offers courses on labor economics, financial economics, industrial organization, money and banking, international economics, natural resource economics (note: here "resource" does mean oil, trees, land), law and economics, health economics, history of economic thought, economic history, and others. Economists group the subjects under two main headings: "microeconomics" and "macroeconomics," affectionately known as "micro" and "macro." Most colleges offer two linked introductory courses, one in micro and one in macro. Microeconomics, as in microscope, looks at the individual units that make up an economy. ("Micro" as also in "microbiology" or "microphone" is Greek for "small"). In the microeconomics course you study auto-makers in Japan or fast food workers in New York City. The main point of micro is to understand the market ("supply and demand"). It's a street-level view.

Macroeconomics looks at the economy as a whole. ("Macro," as in "macrocosm," is Greek for "large.") Macroeconomists study things like growth, inflation, unemployment, and banking crises at the national or international level. It's a top-of-the Sears-Tower view, seeing the economy from a height.

The two parts, the two levels, have to fit together. Microeconomics, studying people and markets in the small, provides hints as to how a large system of markets might fit together as a macro-economy. Some economists claim to reduce all macro questions down to the street-level of micro. Others want to stay at the heights of macro, where the view is wide.