...Introduction All economic problems arise from scarcity because human wants are unlimited but resources are limited. Economics the science of choice, it is talking about how individuals and societies make a choice from the scarcity. All economic choices can be summarized in three questions: What gets produced? How is it produced? Who gets what is produces? Economists define their work in micro and macro perspective. Microeconomics and Macroeconomics are the two major branches of economics. What is Microeconomics? Microeconomics is the study of how households and firms make decisions and how they interact in markets. So all these problems belong to microeconomics: how the consumer reacts when price changes; how the firms decide the output level and how they decide the production method; how should the firms charge their product prices. Microeconomics also considerate the demand and supply of individual goods and services and the equilibrium occurs when the quantity of demands are equal to the quantity of supplies. A typical example of microeconomics is a mobile phone manufacturer decides to charge what price of their new model of smart phone depends on the demand of the mobile markets. A number of factors would affect the demand of the mobile phone including the price of the product itself, the income of the consumer, the consumer’s amount of accumulated wealth, the price of other competitor’s product, the consumer’s tastes and preferences and the expectations about...
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...This paper’s objective is to discuss the differences between microeconomics and macroeconomics and examples of each. It will discuss a personal microeconomic example with the factors that contributed to the decision. It will also discuss an example of a macroeconomic phenomenon and the results of the decision. Economics for the Global Manager Microeconomics is an analysis of how individuals and firms will make themselves as successful as possible in a world of shortages and the penalty of those individual decisions for markets and the entire economy. It will study how individuals and firms make decisions and how the individual decisions will affect markets (Perloff, 2012). Macroeconomic is an analysis of the performance of the whole economic system. It can forecast the national income by studying the major economic factors that have predictable patterns or trends and the influence they have on one another. The factors used are prices, balance of payment positions, gross national product, and employment / unemployment (Macroeconomics, 2013). The difference between microeconomics and macroeconomics is clear. Microeconomics is the study of the individuals / firms markets. It looks at the allocations of resources and the prices of goods. Macroeconomics is a study of the whole economic system. It looks at gross national product and how it affects unemployment. A microeconomic phenomenon example is taking a looks at a specific company to determine how they can maximize the...
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...1. Critically examine the effectiveness of various approaches that may be used to reduce macroeconomic instability. According to Mc Vaish (Macroeconomics theory, p123) Macroeconomics can be defined as the analysis of the economy wide aggregates such as the analysis of the total output and employment, total consumption, total investment, total saving and national product. Macroeconomic theory employs technique of general equilibrium in order to study the determination of the general price level, money supply, total employment and output levels and fluctuations in these aggregates magnitudes. A macroeconomic stable environment can be defined as one in which inflation is low and predictable, the exchange rate is near its equilibrium level, the government budget is well managed, the budget deficit relative to GDP is at a reasonable level and the use of central bank credit to finance the budget deficit is kept at a minimal level. Macroeconomic stability sends important signals to the private sector about the direction of economic policies and the credibility of authorities’ commitment to manage the economy efficiently. Such stability, by facilitating long term planning and investment decisions, encourages savings and capital accumulation by the private sector. Macroeconomic instability takes place in two forms namely exogenous shocks and inappropriate policies. Exogenous shocks (such as reversal capital flows, terms of trade and natural disasters) require compensatory action...
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...Unit 1 - Individual Project - Introduction to Macroeconomic Theory Click Link Below To Buy: http://hwcampus.com/shop/unit-1-individual-project-introduction-macroeconomic-theory/ Assignment Details Assignment Description Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time. In economics, they say a picture is worth a thousand words. Below, you will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions and how you got here in one or more graphs or flowcharts. Scenario One Supply and demand are foundational concepts in understanding economic theory. Whether you are a coffee drinker or not, you have been tasked to examine the impact of supply and demand when dealing with the coffee retail industry. A few companies probably come to mind. Pick a major coffee retailer, and then contemplate what has been happening to both the supply and demand for this product. Next, analyze the following scenario that deals with what happened in the coffee industry at the beginning of the last decade: In the early part of the last decade, there was an overproduction of coffee. The price dropped so low that producers' costs were higher than the market price. The reason this happened was that market prices...
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...Unit 1 - Individual Project - Introduction to Macroeconomic Theory Click Link Below To Buy: http://hwcampus.com/shop/unit-1-individual-project-introduction-macroeconomic-theory/ Assignment Details Assignment Description Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time. In economics, they say a picture is worth a thousand words. Below, you will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions and how you got here in one or more graphs or flowcharts. Scenario One Supply and demand are foundational concepts in understanding economic theory. Whether you are a coffee drinker or not, you have been tasked to examine the impact of supply and demand when dealing with the coffee retail industry. A few companies probably come to mind. Pick a major coffee retailer, and then contemplate what has been happening to both the supply and demand for this product. Next, analyze the following scenario that deals with what happened in the coffee industry at the beginning of the last decade: In the early part of the last decade, there was an overproduction of coffee. The price dropped so low that producers' costs were higher than the market price. The reason this happened was that market prices...
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...Supply and Demand Microeconomics and macroeconomics are both very similar and they both effect economic decisions made by people. Microeconomics focuses on the individual, or the household, and how they make financial and economic decisions. Macroeconomics focuses on the economy, and people, as a whole. It studies what society does financially as a whole. I read the exercise and I also watched the video, but this paper will focus on the video we watched about the apples and pears. There were several microeconomic principles presented in this video. One example of a principle of microeconomics is the increase in demand of apples after apples were said to cure cancer. This causes more people to want to purchase apples. This increase in demand increases the price as well, and the increase in price will cause the supply to go up to. The video also showed an example of how supply can shift as well. In the first example, there was a new invention that helps to prevent apples from disease. This helps the growers out immensely and they are now able to produce and sell more apples. This change in supply causes the supply curve of apples to increase to the right. This shift in quantity supplied causes the price of apples to drop. Both of these are examples of microeconomics. The decision on whether to purchase apples is up to the consumer, or individual, and is based on the price of apples or the benefits of apples. A consumer will always buy the cheaper product or they...
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...there were several microeconomic and macroeconomic principles covered. Also, there were shifts in the supply or demand curve throughout the simulator, and I will explain the shifts in greater detail. To understand what microeconomic principles were used in the simulator, understanding what microeconomics means is important. Microeconomics is the study or analysis of the economy or market on an individual or business level. It focuses on individual buyers and sellers within businesses. One example from the simulator of microeconomics is when Susan asked me to decrease the vacancy rate to 15 percent. In order to do this, I must decrease the cost of the apartments to try and increase the demand or interest in vacant apartments. The reason this is microeconomics is because the decision a decision made on an individual level and has to do with the buyer and seller only to benefit my business. Susan later asked me to lease out all 2,500 available two-bedroom apartments available. In order to do this, Hal suggest we raise the monthly rental cost for the two bedroom apartments so we can cover the maintenance cost. We have to do this in order to stay profitable. This is microeconomics because again, it is focused around the buyer (renters) and the seller (GoodLife Management). The decision to raise the cost was made on an individual or business level in order to stay profitable, which classifies this shift as microeconomics. Macroeconomics is the study or analysis of the economy...
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...Fundamentals of Macroeconomics Kikisha Holmes ECO/372 Principles of Macroeconomics July 8, 2013 Lyn Bush Macroeconomics describes matters such as development, increase in prices, job loss, exchange rates, interest rates, and budget shortages. Macroeconomics provides a combined outline to report these issues and to examine the effect of different policies, such as fiscal and monetary fiscal policies, on the total behavior of individuals. This paper will define specific terms of macroeconomics and how specific examples of economic activities affect government, households, and businesses. The following terms explains the fundamentals of macroeconomics. Gross domestic product (GDP) is the aggregate of the selling prices, or values, of all finished goods and services made in the economy during a specific time frame and calculates the rate of economic activity inside the country. Real GDP is an evaluation of the value of production the economy creates. Nominal GDP is the current market value of all products and services created in the United States. Unemployment rate is the proportionate rate of the amount of individuals unemployed but are still looking for work. Inflation rate is the percentage of the rise or fall of rates on prices. Interest rate is the yearly amount charged by the lender on a product or service for the borrower to acquire the loan and allow the lender to get a return on the investment. ...
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...in the simulation the housing market has increased and decreased because of businesses moving into the area bringing an increase in job market, the change in company expectations and consumer preferences, and the policy changes implemented by the government (University of Phoenix website, 2013). Identifying the two microeconomic and two macroeconomic principles present in the simulation and to explain why these principles are categorized as microeconomic or macroeconomic. The supply and demand was affected by decreasing the rent to lower the vacancy percentage and maximize revenue for the company. This moved is considered a temporary fix on a month-to-month basis and a good example of microeconomics. Another example of microeconomics is when the new company came into town and caused an increased in the population along an increased in the job market. The population and job increase suggest they increase rental rates in response to the increase in demand. An example of macroeconomics is the survey showing that individuals working in Atlantis are living in neighboring cities because of the cost of rent is less. Another example of macroeconomics is when the government steps in and puts a ceiling of $1550 on monthly rent for two-bedroom apartments so that middle-class families can afford to live in the city in which they work. This caused the company to rent only a portion of their apartments to make a profit because of the maintenance cost (University of Phoenix website, 2013). To...
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...Chapter 5: Government Expenditure and Revenue by Ooi Soon Beng After studying this chapter, you should be able to understand: Public Budget Budget Deficits and Surplus Expansionary and Contractionary Fiscal Policy Discretionary and Automatic Fiscal Policy National Debts and Its Issues and Misconceptions Problems with Fiscal Policy : Macroeconomics According to Keynes, government has to intervene to stabilize the economy. Stabilization can be achieved in part by manipulating the Public Budget to increase output and employment or to reduce inflation. The Budget outlines the government’s taxation and expenditure plans for the coming fiscal year. The Ministry of Finance are responsible for the preparation of the budget. Sources of Revenues: Direct taxes on individuals and companies Indirect taxes on goods and services (gasoline, alcohol, tobacco, etc) Non-tax revenue (stamp duty, licenses, permits, etc) Malaysia: Sources of Revenue (in RM) 1990 2013 2014 Direct Taxes 35.2% 56.5% 59.1% Indirect Taxes 36.7% 16.6% 17.2% Non-Tax Revenue 28.0% 26.9% 23.7% Total Revenue 29,521m 207,913m 224,094m Source: Ministry of Finance Categories of Expenses: Operating Expenditure (emolument, pensions, debt servicing, grant to states, subsidies, supplies, scholarships, etc) Development Expenditure (security, social services, economic services, expenditure ...
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...only company that rents apartments within the town. They currently have a vacancy rate of 28 percent. The principles of macroeconomics as well as microeconomics can help them understand and decrease the vacancy rate to 15 percent. It is important for the company to understand the shifts in the supply and demand curves. The rental company can be more successful if they know when to raise or lower the rent. Understanding that economics plays a large role in everyone’s environment will help people and companies be more successful.. Supply and Demand Simulation In the simulation, it is made apparent how often people must deal with the principles of macroeconomics and microeconomics. Every single person is affected by supply and demand. Understanding these aspects of economics will allow people to have a better grasp on the when’s, why’s, and where’s of making purchases in their everyday lives. In addition, understanding the price elasticity of demand can also help a person to understand the importance of how lower and higher demand can have a direct impact on prices. Macro and Microeconomic Principles Supply and demand are the two microeconomic principles that appear in this simulation. When discussing the rental apartments in Atlantis, the simulation discusses the supply and demand associated with them. Macroeconomic principles also appear in the simulation. These principles relate more to the adjustments occurring in the population flow...
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...Fundamentals of Macroeconomics ECO/372 Principles of Macroeconomics January 6,2014 Fundamentals of Macroeconomics Economics proposes that we live in a world of scarcity. We do not have enough resources or time to meet our needs. Economics studies how we allocate our resources to achieve those needs. Macroeconomics deals with the entire components of a country’s economy. Macroeconomics can be called the “big picture” of economics at a national level. Rather than focusing on individual markets, macroeconomics looks at production and consumption of the economy as a whole. The most important basics of macroeconomics include gross domestic product, real gross domestic product, nominal gross domestic product, inflation rates, interest rates, and unemployment (Colander, 2010). PART I The gross domestic product (GDP) is used as a way to determine a country’s economic health. It is basically the amount of services and products that are produced over a period of time, usually a year. To measure the GDP in its simplest form one would add up what everyone earned in a year, or add up what everyone spent. In a perfect world, the two total results would be about the same. The real gross domestic product is adjusted for inflation. To adjust for price changes, the real GDP is measured using the prices from a specific year. For example if real GDP’s from various years are measured, each year uses the quantities from its respective year. However, the prices are all from the base year, only...
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...buy-in on the validity of the estimate. Use of several people should improve the accuracy of the estimate. Micro estimates should be preferred if time to estimate is available, estimating cost is reasonable, and accuracy is important. Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and government decisions. Macroeconomics and microeconomics, and their wide array of underlying concepts, have been the subject of a great deal of writings. The field of study is vast; here is a brief summary of what each covers: Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. For example, microeconomics would look at how a specific company could maximize it's production and capacity so it could lower prices and better compete in its industry. (Find out more about microeconomics in Understanding Microeconomics.) Macroeconomics, on the other hand, is the field of economics that studies the behavior of the...
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...different entities behave may differ due to their different demands and supply. What we mean by decision made at a common level is that it looks at the entire activities and behavior of the entire economy. This may be at national level, regional level or even global level. Difference between microeconomics and macroeconomics Economics is primarily split into two major sections, this are the macroeconomics and the microeconomics. The two are so much connected. Adjustment in one affects the other. Both of them work together in the world of economy. The macroeconomics can be considered to be the summation of microeconomics. However there exists a difference in the two. We shall be discussing on the distinction between the two in the subsequent few paragraphs. To begin with, the naming denotes that there is a difference between macro and microeconomics.’ macro’ stands for large in Greek, while 'micro’ stands for small in Greek. This is to explain that microeconomics covers the economy of smaller regions such as a firm, a company or even individual businesses. Macroeconomics is concerned with a larger area such as regional, national or global economy. Macroeconomics studies indicators such as inflation, GDP, unemployment, rates and price indices in order to get a comprehension on how the entire economy works. It looks into issues like national income, output,...
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...Part 1 Fundamentals of Macroeconomics Macroeconomics puts a focus on how decisions made both on an individual level and by corporations and government has Macroeconomics is known as the study of behavior in relation to the aggregate economy and studies economy-wide issues such as changes in unemployment, income levels and many various other factors (Investopedia, 2012). This paper will define many of the terms used when it comes to dealing with macroeconomics and cover a few examples of economics can effect different situations on both government levels and individual levels. Gross domestic product (GDP) A major term to understand is the gross domestic product which is also known as the GDP. The GDP is the market value of services and final goods that are produced in the economy and the stated price in the given year (Colander, 2010). As people produce goods and earn income from selling those good, the economy grows. Economic growth usually means that a person income increases from one year to the next. Real GDP The real GDP is an inflation adjusted measure shows the value of all goods and services and is being shown in a base year pricing (Colander, 2010). The real GDP is sometimes also referred to as the constant price. To calculate what the real GDP is, a price index is created that measures how much a price level has risen during a year and it is compared to the previous year. This is then divided by the nominal GDP and multiplied by 100 (Investopedia, 2012)...
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