2.1

Question 1

define micro economics

Answer 1

the study of the economic behaviour of individuals and business

Question 2

define macro economics

Answer 2

the study of the whole economy

Question 3

give some examples of decision makers who are involved in micro economics

Answer 3

» an entrepreneur considering which type of business to start
» a farmer deciding how best to allocate farmland to different crops or the rearing of farm animals
» firms investigating the prices being charged by their rivals in order to set their own prices

Question 4

give some examples of decision makers who are involved in macro economcis

Answer 4

,» government decisions regarding which products to tax, such as tobacco, alcohol and petrol — this has a macroeconomic impact not only on these industries but also on the wider economy
» government policies to achieve economic growth, stable inflation, employment, balance of payments stability and redistribution of income
» government decisions to improve market efficiencies and the productive capacity of the economy, such as through education and training, labour market reforms, deregulation, improving incentives to work and invest, and privatisation