Question

4. Analyze the difference between macroeconomics and microeconomics (written response). Determine whether each of the following is primarily a macroeconomic issue or a microeconomic issue (answer only).

A) What price to charge for a TV

B) Tax reform on total consumer spending in the economy

C) Your family's decisions about what to purchase

D) A contractor's decision regarding how much to work each week

E) Government policy to increase employment

Answer 1

Micro economics	Macro economics
Micro means small	Macro means large
Study of economics at individual level	Study of economics as a whole at country level
It deals with the prices of consumer and producer at an specific industry level	It deals with equilibrium level of production and consumption all over the country
Individual income is considered	Equllibrium income is considered
Demand and supply analysis	Aggregate demand and supply analysis
Ex: Individual income	Ex: unemployment, inflation etc

1) The price to be charged for a TV is decided by the firm depending on market conditions which is under micro economics.

2) Tax reforms on total consumer spending effect the economy as a whole which is macro economics.

3) Family is about a Group of individuals. So any decision by individuals is under micro economics.

4) Contractor decision to work for a week depends on his income and his choice which deals with an individual. So it is under micro economics.

5) Any government policy is macro economic in nature as it deals with the country and consider whole people.