What are the two main branches of economics?

The two main branches of economics are microeconomics and macroeconomics. Microeconomics focuses on the individual components of an economy, such as households, firms, and their interactions in specific markets. It analyzes how these entities make decisions about resource allocation, pricing, and consumption. In contrast, macroeconomics looks at the economy as a whole, studying aggregate indicators such as national income, inflation, unemployment, and overall economic growth. This branch examines the larger economic factors that influence the entire economy and how policies can affect these aggregates.

Understanding both branches is crucial for comprehensively analyzing economic issues and policies. By differentiating between the behaviors of individual entities and the overall economy, economists can better understand and predict economic trends and formulate effective strategies to manage economic issues.