?Economics is a social science that mainly focuses on different fields of knowledge dealing with the proper distribution, allotment, production and consumption of resources. Economics has been divided into two significant branches; one of it being the microeconomics and the other one being the macroeconomics. Microeconomics can be easily understood through the term micro itself which means small, microeconomics focuses on small level that is to say it includes areas of individual decision making and its core components include production, exchange, distribution and consumption. Macroeconomics on the other hand focuses on a much aggregate level. Unlike microeconomics it influences those areas in its study that mainly focus on the economy …show more content…
The concept can be understood through the example of cellular networks. Whenever a Cellular connection company decreases its prices and provides more benefits in less prices, than its demand automatically rises amongst the customers as compared to other networks. d) The law of diminishing returns also finds its application in our daily lives. The law states that during a production process the marginality of a product tends to increase if certain variable factors that are involved in its manufacturing are added each time. For example in an industry if there is a large machine being used in the production process than by employing more than one labor to work on it will increase the marginal products produced out of it. The above mentioned examples told us a great deal that how microeconomics finds its application in our daily lives. Now we will talk about how macroeconomics establishes itself as an important essential in understanding some of the mechanism of different transactions and workings in our daily lives. a)Macroeconomics gives economists and state representatives of any country to look over the economical situation of the country. The concept of National Income in Macroeconomics provides them with this opportunity. For example by calculating the national income we are able to have a clear idea whether the different sectors in
Course Description Principles of Macroeconomics deals with consumers as a whole, producers as a whole, the effects of government spending and taxation policies, and the effects of the monetary policy carried out by the Federal Reserve Bank. Macroeconomics is concerned with unemployment, inflation, and the business cycle. Text Required: Macroeconomics, Roger A. Arnold, 7th Edition, 2005 Recommended: Macroeconomics Study Guide, Roger A. Arnold, 7th
1. If an economy produces final output worth $5 trillion, then the amount of gross
Microeconomics deals with the individual parts in the economy and how they relate to each other. Macroeconomics deals with the totals of these parts in our economy
Microeconomics focuses on supply and demand. A company would look at ways to increase production so that the company could decrease their prices compared to competitors. This would adjust the equilibrium price of products by increasing the quantity that is available. This allows the company the capability of passing price savings to consumers. Macroeconomics is used as the economy changes such as with inflation. Inflation would cause a company to have a boost of cost in materials from producing their product. This creates a change in quantity to be provided as supply has to be adjusted to meet the decrease of demand from the effects on equilibrium price.
It may be cheaper to purchase an older truck than a newer car, but in fuel and maintenance, the older truck will cost more. The pros and cons of this decision are all personal. The lower upfront costs may be more beneficial to one person than to another. A personal decision that I am struggling with right now is with my credit rating. I have two credit cards that have a high balance. These are both in my ex-wife’s possession. They are both delinquent on payments. I have to decide whether to just take out a high interest loan to pay these off and renew my credit rating, or to let her financial decisions affect my credit rating.
(Law of Diminishing Marginal Returns) As a farmer, you must decide how many times during the year to plant a new crop. Also, you
Understanding the concepts of macroeconomics and microeconomics help understand factor that affects shifts in supply and demand because now one can see with clarity what are the categories and what those categories are, the ones influence supply and demand and how this same factor may bring equilibrium.
In this way, the Fed manages price inflation in the economy. So bonds affect the U.S. economy by determining interest rates. This affects the amount of liquidity. This determines how easy or difficult it is to buy things on credit, take out loans for cars, houses or education, and expand businesses. In other words, bonds affect everything in the economy. Treasury bonds impact the economy by providing extra spending money for the government and consumers. This is because Treasury bonds are essentially a loan to the government that is usually purchased by domestic consumers. However, for a variety of reasons, foreign governments have been purchasing a larger percentage of Treasury bonds, in effect providing the U.S. government with a loan. This allows the government to spend more, which stimulates the economy. Treasury bonds also help the consumer. When there is a great demand for bonds, it lowers the interest rate.
1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. Answer: C 2) An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. Answer: A 3) An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. Answer:
3. Macroeconomics – the branch of economics that studies the relationship among broad economic aggregates like national income, national output, money supply, bank deposits, total volumes of savings, investment, consumption expenditure, general price level of commodities, government spending, inflation, recession, employment, and money supply.
Microeconomics involves supply and demand in an individual market, individual consumer behavior, and externalities arising from production and consumption; while, macroeconomics involves monetary/fiscal policy, reason for inflation and unemployment, and international trade/ globalization.
Class, you have been assigned into teams of 4 or 5. You need to discuss amongst yourselves how the duties of the assignment will be divided and the manner in which it will be presented to me. Working together will ensure that all parts will be done well and on time.
The Economy is the backbone to society. There are many factors that operate in, and govern our society’s economical structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are two major components. Both of these are broken down into several different components that dictate societal norms and views.
The theory of macroeconomic analysis deals with economic aggregates. This theory is very critical and important in decision making by planning agents in the economy (Mankiw, 2010). Macroeconomics analysis is of great and paramount importance to the three entities that comprise of any economy who are the households, firms and the government institution. The households in the economy are majorly interested in the macroeconomic analysis to determine and know how a slight change in general price level is likely to affect their welfare through what they can be able to purchase with the same level of nominal income. It is also very crucial to the households in explaining how changes in the nominal interest rates is likely to influence the cost of borrowing money by the households for investment purpose. Macroeconomics analysis looks at the aggregate effect of those changes putting into consideration all the households in the economy in order to come up with just one decision measure that is characteristic of the overall economy (Samuelson, 2008).
Microeconomics looks at how individual players in the economy, such as households and firms, interact. It focuses on the impact that their economic choices have on the allocation of scarce resources to meet unlimited demand. These interactions match what one party wants or demands in economic term and what the other gives in exchange (supply). Each time someone buys a chocolate bar from a newsagent or undertakes the morning paper round, there’s an interaction between supply and demand (ESRC).