Question

Classify the following topics as relating to microeconomics or macroeconomics:
a. a worker’s decision about how many hours to work (2 Marks)
b. the effect of government spending on the nation’s unemployment rate (2 Marks)
c. the impact of new technology in the market for DVD recorders (2 Marks)
d. the relationship between education and economic growth (2 Marks)
e. the optimal choice of a firm on how many workers to employ (2 Marks)

Answer 1

Classifying on the basis of the following topics relating to microeconomics and macroeconomics, the answers are:

• a) a worker's decision on how many hours to work is microeconomics. In this case study of an individual is applied which comes under microeconomics branch.
• b) The effect of government spending on nation's unemployment rate is macroeconomics. Macroeconomics deals with an economy as a whole such as inflation, deflation aggregate demand and supply.
• c)The impact of new technology in the market for DVD recorders is microeconomics. Microeconomics deals with different methods of production.
• d)the relationship between education and economic growth is macroeconomics. Here, macroeconomics deals behaviour and decision making of the economy as whole. Educated workers contribute a larger part in growth of economy by working more efficiently and carrying out tasks in a productive manner thereby uplifting country's economy.
• e) the optimal choice of firm on how many workers to employ is microeconomics. According to Kenneth Boulding's definition of microeconomics, it deals with particular commodities, firms and households.

So the answers for the given options are:

a) Microeconomics.

b) Macroeconomics.

c) Microeconomics

d) Macroeconomics

e) Microeconomics