Download Microeconomics vs Macroeconomics

Microeconomics vs
Macroeconomics
Microeconomics vs Macroeconomics
 Microeconomics
focuses on decisions that
individual consumers and businesses make and
how they interact with each other
 Macroeconomics takes a broad view of the
economy and how different macroeconomic
players (households, government and
businesses) interact with each other and the
impact on the country as a whole
Copyright © 2005 by McGraw-Hill Ryerson Limited.
All rights reserved.
Examples of Microeconomics
 Individuals switching over to Apple products from
Samsung products, causing Apple products prices to
rise
 Firms deciding to cut production of VHS tapes
because it’s no longer generating money
 Firms are increasing production of DVDs
 Watermelons have proven to cure many diseases.
Consumer demand for watermelons goes up
Examples of Microeconomics
 Farmers in Ghana are producing more watermelons
 A new company Acer is offering cheaper electronic
products. Consumers are switching over to Acer from
Apple products.
 In reaction to Acer, Apple is increasing its marketing
budget to gain back market share.
 Everyone is demanding more gas. Price of gas goes
up
Examples of Macroeconomics
 The economy is doing well, consumer purchases have




gone up 50%
Because consumer purchases have gone up 50%, firms
are producing more, causing overall GDP to go up.
Because GDP has been going up, price levels of all
products have been going up too. Inflation rate has risen
by 0.2%.
Banks have decreased interest rates. Individuals are
borrowing more, increasing their overall purchases
Government has increased tax rates. Individuals have
less to spend, causing the overall consumption level to go
down.
Examples of Macroeconomics
 Because overall purchases have gone down. Firms
are laying off staff. Unemployment rate goes up 10%.
 Government established a new agreement with other
countries, increasing Canada’s export. As a result,
the Canadian GDP (a.k.a economic growth)
increased by 5%