Chapter 5: Microeconomics and Macroeconomics

Question 1

Microeconomics

Answer 1

Study of the behavior and decisions of households and firms, and the performance of individual markets.

Include changes in the earnings in a particular occupation and changes in the output in the car industry.

Question 2

Macroeconomics

Answer 2

Study of the whole economy.

Macroeconomic topics include changes in the number of people employed in the economy and changes in the country’s output.

Question 3

Decision makers

Answer 3

Households, firms, and government.

Households are buyers, also known as consumers, savers, and workers.

A government produces and provides some products, provides financial benefits, taxes, and regulates the private sector.

Question 4

Aim of decision makers: Households

Answer 4

• As consumers: seek low prices and good quality products.
• As workers: they want good working conditions and high pay.
• As savers: they want their money to be safe and to give a good return.

Question 5

Aim of decision makers: Government

Answer 5

• Wants a strong economy
• Objectives for the macroeconomy
• Seek to improve the performance of individual markets by, for example, taxing the sale of cigarettes.
• Improve social welfarre
• Provide public services

Question 6

Aim of decision makers: Producers

Answer 6

Want to maximize profits