chapter 4 (part 1)

Question 1

What is Microeconomics?

Answer 1

Analyzing the market behaviour of individuals and firms. Consumer decisions on what to buy and where to work. Firms decide how much to produce and how many workers to hire.

Question 2

what is Macroeconomics?

Answer 2

Analyzes the performance of the economy as a whole. Topics like unemployment, inflation, recessions and government spending and taxation.

Question 3

The decision makers. Who are the three main groups that interact in the economy?

Answer 3

1. Consumers - Maximize living standards with financial limitations.
2. Firms - set to Maximize profits
3. Governments -

Question 4

What is market equilibrium?

Answer 4

The price at which supply and demand are equal.

Question 5

How is a countries economic growth measured?

Answer 5

with the Growth domestic product (GDP) measure

GDP is the measure of final goods produced over a period.

Question 6

what are the two ways GDP can be calculated?

Answer 6

1. Expenditure approach

2. Income approach

Question 7

What is the difference between Nominal gdp and real gdp

Answer 7

Nominal GDP - is the dollar value of all goods and services based on thats years prices.

Real GDP - is the dollar value of all goods and services based on the previous years prices. Giving a better idea of gdp taking into account inflation.

Question 8

GDP grows over time from what 3 factors?

Answer 8

1. Growing work force
2. Increase worker skill, better education and new equipment over time
3. New technology