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Economics is a field that is divided into two subdivisions in the AP curriculum: macroeconomics and microeconomics. There are thus two exams you can potentially take: AP Macroeconomics and AP Microeconomics

Definitions 📖:

  • Microeconomics deals with the impacts of individual economic decisions 
  • Macroeconomics deals with the impacts of aggregate (total) economic decisions. 
  • Specifically, microeconomics deals with individual firms, households, products, prices, wages, etc, while Macroeconomics deals with national income, GDP, price level, etc. 
  • Macro is the big picture - GDP, inflation, unemployment
  • Micro is the zoomed in - individuals, markets, firms and structures

Examples:

  • For example, when determining the right wage to pay workers in your factory you use the microeconomic factors of marginal revenue product and demand.
  • Similarly, when determining the GDP of a country you use the macroeconomic factors of consumer expenditure, government expenditure, net investment, and net exports. 

Caveat: 

  • Some economic principles are present in both the study of Macroeconomics and Microeconomics
  • These are known as the basic economic principles and include the principles of scarcity, opportunity cost, comparative and absolute advantage, the production possibilities curve, etc.
  • Macroeconomics and microeconomics work TOGETHER - they are not two completely separate fields

Conclusion:

  • Macroeconomics and Microeconomics have different focuses, but one must learn both to understand the economy as a whole.
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