The realm of macroeconomics

5x puncte

categorie: Economie

nota: 9.87

nivel: Facultate

It focuses on the performance of the entire economy rather than the behaviour of individual participants. The central concern of macroeconomics is the business cycle - recurrent bouts of expansion and contraction of the nation's output. These cycles affect jobs, prices, economic growth, international trade and financial balances.
The distinction micro / macro is not based on the size of the[...]
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It focuses on the performance of the entire economy rather than the behaviour of individual participants. The central concern of macroeconomics is the business cycle - recurrent bouts of expansion and contraction of the nation's output. These cycles affect jobs, prices, economic growth, international trade and financial balances.
The distinction micro / macro is not based on the size of the industry or of the business. Microeconomic decisions may be taken just as well in astonishingly large units like AT&T, but also in small family businesses and the effects of a macroeconomic issue, like unemployment, might be felt at a national level just as in each family.

If economy is to be compared to a "pie", a microeconomist will assume that the pie is of the right size, but frets over its ingredients and division. On the other side, a macroeconomist will analyse the determination of the size of the economic "pie", paying no attention to what is inside or how it is divided among the dinner guests.
Therefore, both approaches are necessary as they refer, after all, to only one economy. The two approaches act according to the principle "where the telescope ends, the microscope begins" and it is hard to say which of the two fields gives a grander view or how do, the fields differ and why.

In either case, the basic forces at work that organise and construct the microeconomic and macroeconomic models are demand and supply.
From this perspective, if we consider the three graphs below, we may interpret them as follows:from a microeconomic perspective, figure 1.1. (a) represents, let us say, the market for milk or any other individual product or service, figure1.1. (b) shows a shift of the respective product demand curve to the right because of increased income and figure 1.1. (c) shows a shift of the respective product demand curve to the left because of reduces income.
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