Section 2.5 Microeconomics and Macroeconomics

Question 1

What two sections is economics divided into?

Answer 1

Microeconomics and macroeconomics

Question 2

What is microeconomics?

Answer 2

The study of the behaviour and decisions of households and firms, and the performance of individual markets (small scale)

Question 3

What is macroeconomics?

Answer 3

The study of the whole economy (large scale)

Question 4

What is a market?

Answer 4

An arrangement which brings buyers into contact with sellers

Question 5

What are economic agents?

Answer 5

Those who undertake economic activities and make economic decisions

Question 6

Examples of economic agents.

Answer 6

Households (consumers, savers, workers), firms, and governments

Question 7

What is a government and what do they do?

Answer 7

Government is the system which rules a country or region. A government produces and provides some products, provide financial benefits, and taxes and regulates the private sector

Question 8

What is the private sector?

Answer 8

Firms owned by shareholders and individuals

Question 9

What is the aim of households when making economic decisions?

Answer 9

Consumers: Low prices and good quality products

Workers: Good working conditions and high pay

Savers: Their money to be safe and give a good return

Question 10

What is the aim of firms when making economic decisions?

Answer 10

Firms in private sector: As much profit as possible

Government: Strong economy, full employment of labour (macroeconomy), improve performance of individual markets