Economics (7th Edition) (What's New in Economics)
Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
Question
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Chapter 19, Problem 19.1.1RQ
To determine

Microeconomics and macroeconomics.

Expert Solution & Answer
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Explanation of Solution

Microeconomics refers to a focus on a particular market and also measures production by the quantity of the goods and services produced. Macroeconomics refers to the production of all goods and services; it determines that production by the quantity of goods and services produced isn’t possible because it would involve adding together goods and services measured in different units; for example, number of automobiles, bushels of wheat, gallons of milk, and so forth. Thus, in macroeconomics, the economist measures the quantity by the market value.

Economics Concept Introduction

Concept introduction:

Microeconomics: Microeconomics focuses on several issues such as consumer behavior, producer behavior, market segments, wage determination, supply and demand of individuals, and so on. It deals with smaller units such as individuals, firms, households, and markets.

Macroeconomics: Macroeconomics refers to the study of a whole unit. It studies the whole market simultaneously. It is also interested in studying the national unemployment rate, foreign debt, and exchange rate.

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Which of the following questions would be studied in the area of microeconomics? Select one: a. What determines the number of hours an individual works? b. Do interest rates affect net exports? c. Will an increase in government spending cause inflation? d. What portion of total spending comes from households in the economy?
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Q.No.1.  Use the model of supply and demand to explain how a fall in the price of frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables.                                                                         Find data on Pakistan GDP and its components, and compute the percentage of GDP for the following components for 2017, 2018, and the most recent year available. Personal consumption expenditures Gross private domestic investment Government purchases Net exports National defense purchases State and local purchases Imports Health Education Do you see any stable relationships in the data? Do you see any trends? See any changes in budget due to COVID-19, in above mention indicators. (Hint: A good place to look for data “Pakistan Economics Survey”, which is written each year. Alternatively, you can go tohttp://www.finance.gov.pk/).
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