2.1 - Microeconomics & Macroeconomics

Question 1

Qualities of mircoeconomics (3 examples)

Answer 1

• Single market
• Price of a good / service
• Individual / market demand
• Individual firm / market supply
• Government intervention in a market
• Reasons for differences in workers wages

Question 2

Qualities of macroeconomics (3 examples)

Answer 2

• Entire economy
• Average price levels in an economy (inflation/deflation)
• Total demand in an economy
• Total supply in an economy
• Government intervention in the economy
• Unemployment & minimum wages

Question 3

Microeconomics

Answer 3

The study of individual markets & sections of the economy, rather than the economy as a whole
* examines the choices of the economic decision makers and their influence

Question 4

Macroeconomics

Answer 4

The study of economic behaviour & decision making in the entire economy, rather than just an individual market
* examines role of government in achieving macroeconomic aims

Question 5

Microeconomic decision makers

Answer 5

• Consumers
• Firms
• Government

Question 6

Macroeconomic decision makers

Answer 6

• Consumers
• Firms
• Government
• Multi-national companies

Question 7

What questions do consumers ask in microeconomics? (3)

Answer 7

• Which combination of goods/services do they value the most
• How to respond to changes in markets they consume in
• How much money to save, spend or borrow

Question 8

What questions do firms ask in microeconomics? (3)

Answer 8

• Which combination of goods/services to supply
• How to best produce goods/services in order to meet their objective (usually profit maximisation)
• How to respond to changing market conditions

Question 9

What questions does the government ask in microeconomics? (2)

Answer 9

• Which policies will be most effective in addressing specific market failures
• Which industries/markets are essential and require government support

Question 10

What question do consumers ask in macroeconomics? (1)

Answer 10

How to best respond to changing macroeconomic conditions such as recessions or interest rate rises

Question 11

What questions do firms ask in macroeconomics? (2)

Answer 11

• How to best respond to changing macroeconomic conditions such as recessions, interest rate rises or a low supply of labour
• Whether to sell their goods/services locally, nationally or internationally

Question 12

What question does the government ask in macroeconomics?

Answer 12

How to determine the best combination of policies that will help them meet all of their macroeconomic aims

Question 13

What questions do MNCs ask in macroeconomics? (3)

Answer 13

• Which countries to invest in
• How to best develop international advantages
• How to engage with the government and local workforce in a way that maximises profit without harming the brand image