ABSTRACT
The two major branches of economic theory are microeconomics and macroeconomics. The terms micro and macro have been commonly used for more than fifty years now and one would think that it should be clear how the two terms are to be understood, and in particular what distinguishes the one from the other. As observed by Machlup (1963) some time ago, this is, unfortunately, not the case, and this state of affairs has not changed significantly since then. The main problem that the confusion generates is that the relation between microeconomics and macroeconomics remains unclear. The present chapter sorts out different attempts to define the two terms in a coherent way. The purpose is not to arrive at ‘sound’ definitions, but rather to delineate a few possible ways to distinguish micro from macro. In the rest of the book, two (different) ways to make the distinction will play a crucial role. Here, these two ways are introduced and contrasted with other ways to distinguish microeconomics from macroeconomics.
