Introduction to Macroeconomic

January 7, 2015

1. Macroeconomics is the study of the entire economy, which covers the ups and downs of the economy. 

Microeconomics is the study of parts of the economy in which people make decisions and how the decisions interact.

Example for Macroeconomics:

•  GDP- Represents the monetary value of all the good and services in a nation, withing a specific time.
• Inflation- Its a progressive increase in the price and things get more value but the money buys a lesser percentage of the good or service.
• Unemployment- A person not being able to get a job but would like to have one.

Example for Microeconomics:

• Supply and Demand- Is the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.
• Market Structure- Is best defined as the organisational and other characteristics of a market. We focus on those characteristics which affect the nature of competition and pricing.

2. Positive Economics (fact) describes the way the economy actually works. 
 Normative Economy (opinion) describes the way the economy should work.

Example for Positive Economics:

• Minimum Wage- The lowest wage permitted by law or by a special agreement of the government. 

Example for Normative Economics:

• Taxes- We should cut the taxes in half to increase the available income.

3. Basic Needs is  is something you have to have, something you can't go without.
 Wants is something you would like to have, but it is not absolutely necessary. 

Examples for Basic Needs:

• Food- If you don't eat, you will not be able to survive.

Examples for Wants:

• Music- You might like music a lot, but it does not need you cannot live without it.