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Questions and Answers
What does microeconomics analyze?
What does microeconomics analyze?
- Individual agents and markets (correct)
- Social interactions
- Global economic systems
- Government policies
What does macroeconomics analyze?
What does macroeconomics analyze?
- Environmental impacts
- Economy as a system and factors affecting it (correct)
- Microeconomic behavior
- International trade
What is the distinction between positive economics and normative economics?
What is the distinction between positive economics and normative economics?
- Describing 'what is' vs advocating 'what ought to be' (correct)
- Describing 'what ought to be' vs advocating 'what is'
- Advocating 'what is' vs describing 'what ought to be'
- Describing 'what is' vs predicting 'what will be'
What are the elements analyzed in macroeconomics?
What are the elements analyzed in macroeconomics?
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What are the broad distinctions within economics?
What are the broad distinctions within economics?
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Study Notes
Microeconomics and Macroeconomics
- Microeconomics analyzes the behavior and decision-making processes of individual economic units, such as households, firms, and markets.
- Macroeconomics analyzes the economy as a whole, focusing on aggregate variables, such as national income, employment, and inflation.
Positive and Normative Economics
- Positive economics analyzes what is, describing and predicting economic phenomena, without making value judgments.
- Normative economics analyzes what ought to be, making value judgments and policy recommendations, based on economic analysis.
Elements of Macroeconomics
- Gross Domestic Product (GDP)
- National income
- Employment
- Inflation
- Economic growth
Broad Distinctions within Economics
- Microeconomics (individual economic units)
- Macroeconomics (the economy as a whole)
- Positive economics (descriptive and predictive)
- Normative economics (prescriptive and evaluative)
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