Micro and macro are the two approaches to economic problems and analysis. The former relates to the study of individual economic units, while the latter is a study of the economy as a whole. The terms microeconomics and macroeconomics were coined by Prof. Ranger Frisch of Oslo University for the first time in 1933 and since then these gained popularity and were widely used by the economists all the world over. Presently, these have become an integral part of economic terminology.

The term macro has been derived from the Greek word ‘makros’ which means ‘large’. Macroeconomics is a study of aggregates or average of the entire economy, e.g., total national output and income, total employment, total consumption, savings, investment, aggregate demand, aggregate supply, general price level, etc. Thus, macroeconomics attempts to describe and explain the working of the economic system as a whole.

The term ‘micro’ has been derived from mother Greek word ‘mikros’ which means ‘small’. Thus, microeconomics deals with the analysis of a small part or component of the whole economy such as individual consumers, individual firms and small aggregates or groups of individual units, such as various industries or markets. Similarly, determination of prices of particular commodities, of wages of particular groups, etc., are problems of microeconomics.

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