Microeconomics and Macroeconomics 宏观经济与微观经济的区分以及案例分析

1. A branch of economics dealing with the performance, structure, behavior, and

decision-making of an economy as a whole, rather than individual markets.

2.Basic concepts:

✓Output and income

✓Unemployment

✓Inflation and deflation.

3.It studies aggregated indicators such as:

✓GDP (gross domestic product): the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time. GDP per

capita is often considered an indicator of a country's standard of living.

✓Unemployment rate:

"Unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work.

✓Price indexes:

1. CPI (Consumer price index): measures changes in the price level of a market basket of consumer goods and services purchased by households. Goods listed in the CPI include food and beverages, transportation, housing, clothing, medical care, recreation, education and communication, and other goods and services.

2. PPI (Producer price index): measures the average changes in prices received by domestic producers for their output.

➢Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance.

➢Macroeconomics policy:

✓Monetary policy(interest rates)

✓Fiscal policy (tax structure and government spending)

➢ A branch of economics that studies the behavior of individuals and small impacting players in making decisions on the allocation of limited resources.

➢It applies to markets where goods or services are bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.

➢It studies the topics as follows:

✓Demand, supply, and equilibrium(market price): price is a market’s automatic regulator.

✓Measurement of elasticities:

✧The ratio of the percentage change in one variable to the percentage change in

another variable, when the latter variable has a causal influence on the former.

✧Price elasticity of demand: a measure of the responsiveness of the quantity

demanded of a good to a change in its price when all other influences on buyers’

plans remain the same.

Percentage change in price=[(new price-initial price)/initial price]*100

Percentage change in quantity=[(new quantity-initial quantity)/initial quantity]*100

(-)

Elastic demand: (dQ/Q)>(dP/P) or e>1

Unit elastic demand: (dQ/Q)=(dP/P) or e=1

Inelastic demand:(dQ/Q)<(dP/P) or e<1

Perfectly elastic demand:(dQ/Q→∞)/(dP/P=0)

Perfectly inelastic demand:dQ/Q=constant

Influences on the price elasticity of demand:

1)availability of substitutes:

Luxury VS necessity;

Narrowness of definition;

Time elapsed since price change

2)proportion of income spent: the greater the proportion of income spent on a good,

the greater is the impact of a rise in its price on the quantity of that good that people

can afford to buy and the more elastic is the demand for the good.

✧price elasticity of supply (+) (for self learning)

✧income elasticity of demand:

>1 (normal good, income elastic)

<1 (normal good, income inelastic)

<0 (inferior good)

✓Four elements of private enterprise: private property rights, freedom of choice, profits,