Micro = parts; macro = whole economy
Microeconomics studies individual agents and single markets — how the price of one good (e.g. rice) is set by demand and supply, how one firm sets output, how one household spends its income. Macroeconomics studies the whole economy — total output (GDP, gross domestic product), the general price level (inflation), unemployment and trade. Test: one market, firm, good or consumer = micro; the whole economy added together = macro.
Different decision-makers in each branch
Each branch has its own decision-makers. In microeconomics: consumers (what to buy with limited income), workers (where and how much to work) and firms (what and how much to produce, at what price). In macroeconomics: the government (taxation and spending — fiscal policy) and the central bank (interest rates and money supply — monetary policy). The two connect: macro policy changes the environment micro decision-makers act in.
Micro and macro are linked
Micro and macro are not separate economies — they are two levels of the same one. Millions of individual consumers' spending decisions (micro) sum to total consumer spending, a major part of national output (macro). In reverse, a macro policy — the central bank raising interest rates to curb inflation — raises borrowing costs for one firm or household (micro). Use this link to classify a scenario: a single market or agent is micro, the aggregate is macro.
Drawn from real examiner reports.
Identify then develop the point
A recurring weakness is identifying a relevant factor but not developing it, so the extra marks are lost. Stating "macroeconomics is about the whole economy" is only partial — add an economy-wide example (the inflation rate) and explain why it is economy-wide. On explain, analyse and discuss parts, take every point a step further with a "because..." link.
June 2023 Paper 2 (0455/21), General comments: candidates correctly identified relevant factors but did not develop them (e.g. a point inside a PPC stated but not explained, a PES influence identified but its effect not stated), reducing total marks.
Match answer length to the command word
Notice whether a part says Identify, Explain, Analyse or Discuss and answer to match. Do not write a paragraph for a 2-mark "define" (a precise sentence is enough), and do not give an 8-mark "discuss" answer shorter than your 4-mark (b) — far too brief for the depth required. A discuss needs two developed sides and a judgement, roughly twelve minutes.
November 2022 Paper 2 (0455/22), Key messages: candidates must notice whether a part requires Identify/Explain/Analyse/Discuss. June 2022 Paper 2 (0455/22): long answers given to short parts; (d) answers sometimes shorter than (b) answers and lacking required depth.
Classify at the right level
Candidates mislabel examples. A rise in one good's price (say coffee) is micro — one market. A rise in the general price level (inflation) is macro — the whole economy. One firm cutting jobs is micro; a rise in the national unemployment rate is macro. The test is scope: one market, firm, good or consumer = micro; the aggregate of all markets = macro.
Macro is more than big numbers
Macro does not just mean bigger numbers. It means economy-wide aggregates — total output, the general price level, national unemployment — not simply large figures. One large firm's output is still a micro matter; national output added across all firms is macro. Judge by scope, not by the size of the number.
Firms are a micro decision-maker
Firms are a key microeconomic decision-maker — they decide what and how much to produce, and at what price. The macroeconomic decision-makers are the government (fiscal policy) and the central bank (monetary policy). Do not assume firms belong only to macro; a single firm's choices sit firmly in micro.
8-mark discuss: two sides + judgement
The (d) discuss is where most marks are won or lost. Give a reasoned discussion of both sides with depth, then a supported judgement (the AO3 marks). Spend about twelve minutes, and never let it be shorter than your (b) answer.
Use the scope test to classify
Before analysing, classify with the scope test: one market, firm, good or consumer = micro; an economy-wide aggregate = macro. Getting the level right first stops you applying the wrong economics.
Match the command word
Answer to the command word: define = a precise sentence; explain = a developed reason; analyse = a chain of reasoning; discuss = both sides plus a judgement. A long answer to a low-tariff part wastes time you need for (d).
Economics is divided into two levels of analysis of the same economy.
| Branch | What it studies | Scale |
|---|---|---|
| Microeconomics | Individual economic agents and single markets | Small scale — one consumer, one firm, one good, one market |
| Macroeconomics | The economy as a whole | Large scale — total output, the general price level, national unemployment, trade |
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