Quiz 5: An Introduction to Macroeconomics


Examples of aggregates in day-to-day life • Audience watching basket ball generally think that their respective countries will win the match. • The producer of pizzas generally believes that, if the price of price of pizza goes down, more people will prefer to buy pizza.

Micro Economics: Micro economics deals with the individual behavior. It tells about the economic variables at the disaggregate level. Macro Economic s: Macro economics deals with the behavior of the entire economy. It tells about economy as a whole, which includes general price level, general employment, aggregate demand, aggregate supply, general wage rate, etc. a. Growth of F book - Micro economist: The rapid growth of F book will be examined by a micro economist because in this case, the growth of a single firm (Facebook) is studied. b. Unemployment rate in the U.S. - Macroeconomist The study is deals with the countries total unemployment. Since it deals with the aggregate unemployment, it is the macro economics study and the macro economist should examine this. c. Comparison of growth rates of the U.S. and Ja - Macroeconomist The study is comparing the growth rate of two countries. Since the studies analyses the two countries growth rate, it is the macroeconomics study and should examined by the Macro economist. d. Study of health-care costs - Micro economist: The study on rapid rise in health-care costs in recent years will be analyzed by a micro economist. The health care sector is a single sector. Since it is the single sector, it is come under micro economics category. Thus, it should be examined by the micro economist.

Reason for the expectation of increasing price over the period of time Over the period of time, income of the people tends to increase; this in turn increases the cost of production. To compensate the increase in the cost of production, firms will increase the price of the commodities. Hence, the people believe that over the period of time, general price level in an economy increases.