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Questions and Answers
What is the primary focus of economics?
What is the primary focus of economics?
- Maximizing profits for businesses
- Promoting equal distribution of wealth
- Minimizing government intervention in markets
- Allocation of resources to satisfy unlimited wants (correct)
What does the 'ceteris paribus' assumption mean in economics?
What does the 'ceteris paribus' assumption mean in economics?
- Focusing on the long-term economic impacts
- Considering only the short-term effects
- All other things being equal (correct)
- Ignoring the law of supply and demand
What is the difference between microeconomics and macroeconomics?
What is the difference between microeconomics and macroeconomics?
- Macroeconomics examines consumer behavior, while microeconomics looks at government policies
- Microeconomics deals with international trade, while macroeconomics focuses on domestic markets
- Microeconomics focuses on individual economic units, while macroeconomics studies the economy as a whole (correct)
- Microeconomics studies inflation, while macroeconomics studies unemployment
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Study Notes
Fundamentals of Economics
- The primary focus of economics is to study how individuals, businesses, governments, and nations make decisions about how to allocate limited resources to meet their unlimited wants and needs.
Assumptions in Economics
- 'Ceteris paribus' is a Latin phrase that means 'all other things being equal', and is an assumption used in economics to isolate the effect of a single variable on a specific outcome.
Branches of Economics
- Microeconomics studies the behavior and decision-making processes of individual economic units, such as households, firms, and markets, to understand how they allocate resources and make decisions.
- Macroeconomics examines the economy as a whole, focusing on issues like economic growth, inflation, unemployment, and international trade to understand the overall performance of the economy.
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