Download THREE TOPICS OF SHORT REPORTs

THREE TOPICS OF SHORT
REPORTs
ANDREA FARINA will speak about:
• Microeconomics
• Macroeconomics
• Positive Statements
Two subfields of economics study
Because of its complexity, to understand the various economic
processes, Economics is divided in two different sectors:
• MICROECONOMICS
• MACROECONOMICS
These two fields study DIFFERENT MATTERS and so they
often have DIFFERENT APPROACHES.
THE DEfinition of MICROECONOMICS
This subfield studies:
• the firm’s or household’s INDIVIDUAL DECISION to
allocate their limited resources
• their INTERACTION in the market
This study sector comes out from the conception of Economy as
the management and the allocation of limited resources, such as
in a family. So every person could potentially INFLUENCE
ECONOMY with his individual choises.
The application of
microeconomics
The typical application of microeconomics is in the market of
goods and services.
Its aim is to EXAMINE HOW INDIVIDUAL BEHAVIOURS
INFLUENCE DEMAND AND SUPPLY.
From this analysis, we can study the DETERMINATION OF
PRICES and so the QUANTITIES SUPPLIED AND
DEMANDED.
AN EXAMPLE OF MICROECONOMICS
APPLICATION
An example of microeconomics study could be the rent control on
housing in New York city, or the effects of compulsory school
attendance on workers’ earnings.
CONCLUSION: We can see that this way of analysis is strictly
linked to little economic processes, which can regard even a few
people.
THE DEFINITION OD MACROECONOMICS
This subfield studies:
• the ECONOMY-WIDE PHENOMENA
This study sector deals with the economy as a WHOLE: it is the
SUM OF THE ACTIVITIES OF ALL THE DECISIONMAKERS, like firms or households.
In this way, we can see how Macroeconomics is strictly LINKED
and INFLUENCED by Microeconomics: the economy-wide
phenomena depend on the individual choise of each person.
The application of
macroeconomics
With some typical indicators, such as G.D.P., Macroeconomics is
applied to UNDERSTAND THE WHOLE ECONOMY
FUNCTIONS.
Its models aim to EXPLAIN THE LINK OF SOME FACTORS
WITH THE INTERNATIONAL FINANCE.
An example of macroeconomics
application
An example of Macroeconomics study could be the effects of
borrowing by federal government or the alternative policies to
raise growth in national living standards.
CONCLUSION: We can see that this way of analysis is strictly
linked to big economic processes, which often regard millions
of people, considered as one.
THE DEFINITION OF POSITIVE
STATEMENTS
To examine economic world, we can use two differents
techniques:
• POSITIVE STATEMENTS: typical of scientists, its aim is to
DESCRIBE REALITY AS IT REALLY IS (descriptive way)
• NORMATIVE STATEMENTS: typical of policy, its aim is to
PRESCRIBE HOW WORLD SHOULD WORKS
(prescriptive way)
The application of positive
statements
Even if positive statements don’t aim to change the world, they
have a FUNDAMENTAL ROLE: they help us to CLARIFY
THE REALITY and to STUDY ITS BEHAVIOURS.
So trying to change the world needs not only positive statements
because you can also consider, for example, ethics or
philosophy. You need POSITIVE STATEMENTS + VALUE
JUDGMENTS in order to obtain normative statements.
EXAMPLES OF POSITIVE STATEMENTS
Examples of POSITIVE statements could be the following
sentences:
• Minimum-wage laws cause unemployment.
(NORMATIVE: The government should raise the minimum
wage.)
• The price of milk has risen from $3 gallon to 5$ gallon in the
five past years.
(NORMATIVE: The government sould control the increase of
milk prices.)
The End