Microeconomics focuses on how individual consumers and producers make their decisions. This includes a single person, a household, a business or a governmental organization. Microeconomics ranges from how these individuals trade with one another to how prices are affected by the supply and demand of goods. Also studied are the efficiency and costs associated with producing goods and services, how labor is divided and allocated, uncertainty, risk, and strategic game theory.

Macroeconomics studies the overall economy.  This can include a distinct geographical region, a country, a continent or even the whole world. Topics studied include government fiscal and monetary policy, unemployment rates, growth as reflected by changes in the Gross Domestic Product (GDP) and business cycles that result in expansion, booms, recessions and depressions. 

There are also schools of economic thought. Two of the most common are Classical and Keynesian. The Classical view believes that free markets are the best way to allocate resources and the government’s role should be limited to that of a fair, strict referee. In contrast, the Keynesian approach believes that markets don’t work well at allocating resources on their own, and that governments must step in from time to time and actively reallocate resources efficiently. 

Some branches of economic thought emphasize empiricism in economics, rather than formal logic — specifically, macroeconomics or Marshallian microeconomics, which attempt to use the procedural observations and falsifiable tests associated with the natural sciences. Since true experiments cannot be created in economics, empirical economists rely on simplifying assumptions and retroactive data analysis. However, some economists argue economics is not well suited to empirical testing, and that such methods often generate incorrect or inconsistent answers.