What is the difference between macroeconomics and microeconomics?

Macroeconomics is the branch of economics that deals with aggregate economic decision or behavior of an economy as a whole; for example, the problem of inflation, level of unemployment, and payment of a deficit. To put it simply, it studies the economy as a whole.

In contrast, Microeconomics is the branch of economics that studies the behavior of an individual decision-making unit such as an individual firm, their relationship with the market, at what price to set a commodity, how much of a commodity should be produced, how an individual uses their income to maximize satisfaction, and how the price of each commodity in the market is affected by the forces of supply and demand.

For example, macroeconomics deals with GDP, inflation, interest rates, and unemployment. Microeconomics deals with the economics of health care or agriculture or labor. For instance, a macroeconomist would study GDP numbers, Fed moves, the Dow Jones Industrial Average, or the Producer Price Index. A microeconomist, on the other hand, might attempt to study the economics of labor (ie: unions, labor shifts, etc).

Although "micro" means small and "macro" means large, the two shouldn't be separated by the size of an economy or firm. For example, Wal-Mart may be many times the size of the economy of a small nation; however, Wal-Mart's costs and supply/demand curves will be governed by microeconomic decisions while the GDP of the small economy is an aspect of macroeconomics.