Differentiate between microeconomics and macroeconomics.

Microeconomics focuses on individual economic units, while macroeconomics looks at the economy as a whole.

Microeconomics is a branch of economics that studies the behaviour of individual households and firms in making decisions on the allocation of limited resources. It primarily focuses on the factors that influence individual economic choices and how changes in these factors affect the economy. Microeconomics deals with issues like the impact of price changes on consumer behaviour, how firms decide on production levels, and the way markets allocate resources efficiently. It also analyses how different industries compete among each other and the role of government in promoting competition.

On the other hand, macroeconomics is the study of the economy as a whole. It analyses aggregate indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomics also studies the effects of fiscal and monetary policy on the economy's overall performance. It looks at economy-wide phenomena such as inflation, price levels, rate of growth, national income, savings, and investment. Macroeconomics also deals with issues like the causes of economic upturns and downturns, monetary and fiscal policy, and international trade.

In essence, while microeconomics focuses on the trees, macroeconomics looks at the forest. Microeconomics is concerned with the details of a specific market, while macroeconomics looks at the economy as a whole. Both are essential for a comprehensive understanding of economic theory and practice. They are interdependent and complement each other. For instance, the understanding of microeconomic principles aids in the formulation of sound macroeconomic policies and vice versa.

In summary, microeconomics and macroeconomics are two different perspectives on the economy. The former looks at the small scale, the individual parts of the economy, while the latter looks at the big picture, the economy as a whole. Both are necessary for a complete understanding of economics.