UNIT 1: MACROECONOMICS

Outcomes of this unit

At the end of this unit, the learner must be able to:

What is economics?

What are the branches of Economics?

What are the approaches to economics?

WHAT IS ECONOMICS?

ECONOMICS

Economics is the study of the way individuals, business and other

organizations make choices about how to produce goods and services
from scarce resources and how these goods and services are distributed
to consumers to satisfy their needs and wants. Choices have to be made
because resources are scarce and people have unlimited needs and
wants.

Branches of economics

Environm
Environm
ental
ental
economic
economic
s
s
Public
Public
sector
sector
economic
economic
s
s

Monetary
Monetary
economic
economic
s
s

Branches
Branches of
of
economics
economics

Internatio
Internatio
nal
nal
economic
economic
s
s

Macro
Macro
economic
economic
s
s

Develop
Develop
mental
mental
economis
economis

Branches of economics

Monetary economics> Is the study of money and the banking industry in a country. It looks specifically at how
money is controlled and regulated, and how it is used as a product in the exchange process.

International economics> it focus on the study of international trade and finance. It is growing more important
to understand how international trade works and why most countries need to import and export products.

Public sector economics> it pays attention to decisions and policies made by a countrys government. It is also
considers government income , budget and expenditure.

Development economic>It focuses on strategies and policies that help countries to develop and grow.
Economists try to apply these strategies so that the people in less developed countries will experience greater
levels of prosperity and satisfaction of their needs and wants.

Labour economics>It pertains to the demand and supply of labour within an economy and the factors affecting
the productivity of labour.

Environmental economics>Is a relatively new form of economics. This form of economics pays special attention
issues and the economic implications of certain environmental decisions on the society of a country.

Regional economics> It refers to the study of specific geographical regions in a country responsible for the
production of certain goods and services. A good example is agricultural products where different geographical
areas in the country are known for the production of different agricultural products.

APPROACHES TO ECONOMICS

Economics is a social science, which means that it concentrates on the

analysis of people and their behavior. Economists break the study of
economics down into two broad areas:

Approaches continue ..

Micro economics is the study of individual consumers, households,

firms and other organisations, and of their decisions and responses.
Micro-economics considers the individuals decide what to buy and when
to buy it.

Macro-economics is the study of the economy as a whole. It focuses

on the economic behavior of a society. Examples of macro economics
would be the study of inflation or a countrys economic performance.
Here we look at the bigger picture , the total economic behavior and
performance of the economy of a country or the world.

Activity 1: Distinguish between macro

and micro economics
1.

Which are the following are macro-economic issues and which are micro-economic issues? State if you
think that some are both.

1.1. unemployment.

(2)

1.2. the wages of workers in the mining sector

(2)

1.3 the rad/dollar exchange rate

(2)
1.4the interest rate in south Africa

(2)

1.5 the 6% growth rate of the south African economy

(2)

1.6the decline of the gold price.

(2)
2.Look in todays newspaper and find four other examples of micro or macro-economics issues. Say which
each one is.
(8)
20 marks

THANK YOU!