Discuss some of the fundamental differences between microeconomics and macroeconomics.
What will be an ideal response?
Microeconomics studies the decisions of individuals and firms, the ways in which these decisions interact, and their influence on the allocation of a nation’s resources and the distribution of income. Macroeconomics looks at how entire economies behave and studies the pressing social problems of economic growth, inflation, and unemployment. In short, whereas microeconomics focuses on the decisions of individual units, no matter how large, macroeconomics concentrates on the behavior of entire economies, no matter how small. Although they focus on different subjects, microeconomics and macroeconomics rely on virtually identical tools.
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The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. The competitive equilibrium is at
A) point G. B) point H. C) point I. D) point J.
Individuals must make choices because
a. resources are scarce and wants are limited b. resources and wants are unlimited c. assets and wealth are distributed unevenly d. resources are scarce and wants are unlimited e. inflation usually outpaces income growth