Introduction to Microeconomics
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Questions and Answers

What is the focus of microeconomics?

Microeconomics focuses on the behaviour and interactions of economic agents and how economies work.

What does macroeconomics analyze?

Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements.

What are the broad distinctions within economics?

The broad distinctions within economics include those between positive economics, describing 'what is', and normative economics, advocating 'what ought to be'; between economic theory and applied economics; between rational and behavioural economics.

What does economics study?

<p>Economics studies the production, distribution, and consumption of goods and services.</p> Signup and view all the answers

What are examples of individual agents in microeconomics?

<p>Examples of individual agents in microeconomics are households, firms, buyers, and sellers.</p> Signup and view all the answers

What is fiscal policy?

<p>Fiscal policy is the use of government revenue collection and expenditure to influence a country's economy.</p> Signup and view all the answers

Who theorized about the influence of government changes in taxation and government spending on aggregate demand and economic activity?

<p>The British economist John Maynard Keynes.</p> Signup and view all the answers

Why did the use of government revenue expenditures to influence macroeconomic variables develop?

<p>It developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable.</p> Signup and view all the answers

What are the key strategies used by a country's government and central bank to advance its economic objectives?

<p>Fiscal and monetary policy.</p> Signup and view all the answers

What is the conventional range considered 'healthy' for inflation in modern economies?

<p>2%–3%.</p> Signup and view all the answers

Flashcards

Microeconomics Focus

Studies individual economic agents and how economies work at a small scale.

Macroeconomics Focus

Analyzes the economy as a whole, including factors like inflation and employment.

Positive Economics

Describes economic events as they are, not how they should be.

Normative Economics

Prescribes how the economy should work.

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Fiscal Policy

Government use of spending and taxes to influence the economy.

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Microeconomic Agents

Individuals or groups (like households, firms, buyers, sellers) that participate in the economy.

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Keynesian Economics

Focuses on aggregate demand's impact on the economy (esp. government intervention).

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Healthy Inflation

A stable inflation rate (generally considered to be 2%-3% annually).

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Economics Studies

The production, distribution, and consumption of goods and services.

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Aggregate Demand

The total demand for goods and services in an economy.

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