The word 'economics' is derived from the Greek phrase meaning 'management of a household'. It is generally defined as the study of how societies can coordinate their wants by the effeciency of production and distribution of goods and services within the marketplace. Economics try to answer four central questions, (1) What should be produced, (2) How much should be produced, (3) How should it be produced, and (4) For whom should it be produced.
Economics is considered a wide and complex subject that deals with individuals, households, cities, regions, nations, and international trading. It incorporates areas such as the distribution of income, labour relations, the enviornment, and the welfare of citizens. Given the broad nature of the subject of economics, it is categorized into two fundementally different branches: microeconomics and macroeconomics.
Microeconomics is based on the needs and choices of individuals within a society. It is a bottom-up view of an economy, and is mostly focused on areas such as infividual households, companies, firms, and the notions of supply and demand.
Macroeconomics focuses on large-scale and general economic factors, such as countries or multinational trade agreements, such as the European Union. It is top-down in its nature of analysis and studies the economy as a whole, collectively considering all areas such as output levels, rate of growth, aggregate production, price levels, and employment levels. It is a highly critical component of understanding the reasons and causes behind inflation, deflation, short- and long-term employment, importing and exporting, economic development, and a country's level of competitive ability on the international stage.