Which of the following is primarily a macroeconomic issue rather than a microeconomic issue?a. What price to charge for an automobile b. Measuring the impact of tax policies on total consumer...
Which of the following is primarily a macroeconomic issue rather than a microeconomic issue?
The correct answer is B, measuring the impact of tax policies on total consumer spending in the economy. This is a macroeconomic issue because the statement talks about tax policies which are likely to impact on the entire economy, and with regards to the answer the impact is being measured on total consumer spending. Macroeconomics deals with economic trends at large rather that individual market sectors, industries, firms or individuals. Other issues within macroeconomics include; the Gross Domestic Product, Unemployment rates in an economy and inflation. As noted, the two branches of economics, macro and micro economics are intertwined and impact each other. For instance a review of tax policies at the national level will shape decisions of a firm or even an individual about whether to buy a certain product for individuals or invest or divest in a certain line of products for firms.
Of these, only B is a macroeconomic issue. All of the others are primarily microeconomic issues.
Macroeconomics is the study of the economy as a whole. By contrast, microeconomics looks at decisions that are made by such entities as individuals, households, firms, or single industries. Using this definition, we can see that A, C, and D are microeconomic issues. A is a decision on the part of a firm, C on the part of a household, and D on the part of an individual.
By contrast, B looks at the whole economy. It looks at a decision taken by a government and examines its impact on all people in an economy.