Microeconomics analyses the interaction of individuals, households and firms in an economy. It studies the contributions of each person, household and firm in the economy. It analyses how each firm, household and individual allocates their resources to the economy for production, trade and consumption.

Macroeconomics on the other hand studies the entire economy. It analyses the total change in the economy in terms of employment, price stability, economic growth, balance of payments and inflation. In simple terms, it studies the behaviour and performance of the economy as a whole.