Principles of Macroeconomics
Phase 1 Individual Project: Introduction to Macroeconomic Theory ECON210-1403A-01
July 14, 2014
In order to understand the concepts of macroeconomics and microeconomics, the definition and the concept of economics must first be explored and understood. Economics is the focus of how the production, consumption, and transfer of wealth affect the standard of living. Economics is broken up into main areas, macroeconomics and microeconomics. Macroeconomics is the greater aspect of economics as it focuses on aggregate production and consumption in an economy. Some of the topics that macroeconomics cover are the effects of taxes on output and prices, how interest rates are calculated, the reasoning behind faster growing economies as opposed to others and what causes economic upswings and downturns (Beggs, J. n.d.). On the other hand, microeconomics is the decisions that are made on a smaller scale based on the factors that result in such decisions and how others are affected by those decisions. These decisions are made by individuals and groups such as a household for example (Moffatt, M., n.d). Example 7:The government raises taxes
Is the scenario a macroeconomic or microeconomic example of supply and demand? The rise of taxes by the government is an example of macroeconomics. Is this impacting supply or demand?
The rise of taxes impacts both supply and demand. Taxes drive market equilibrium to a price that is higher than without the tax and a quantity that is lower than without the tax (Anonymous, n.d.) Is this example going to experience a shift or a movement of supply or demand? The rise in taxes will experience a movement of and demand.
As a result of this change, what happened to equilibrium price and quantity? The equilibrium price will fall as quantity will increase.
Example 6: A new health report came out that said red wine lowers cholesterol. Is the scenario a macroeconomic or...
References: Beggs, J. (n.d) What is Macroeconomics. Retrieved from: http://economics.about.com/od/economics-basics/a/Microeconomics-Versus-Macroeconomics.htm
Moffatt, M. (n.d.) What is Microeconomics. Retrieved from: http://economics.about.com/cs/studentresources/f/microeconomics.htm?utm_term=microeconomics%20basics&utm_content=p1-main-7-title&utm_medium=sem&utm_source=msn&utm_campaign=adid-c40fc4d5-08d3-4356-b015-7facb8e8810f-0-ab_msb_ocode-5990
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