Microeconomic issues

• How much will a consumer spend on food?

• How much time a worker is willing to work?
• How much output will a firm produce?
• Which quality to produce?

– choices made by Individual agents

Macroeconomic issues
• How much income will the country save?
• What is the appropriate exchange rate between currencies?
• What will happen to employment if taxes are raised?

– Aggregate outcome of all the decisions made by individual agents.

 Some typical macroeconomic issues:

• Should the government raise income tax?

• Should the budget deficit be reduced?
• Should the interest rate be cut down?
• Should the exchange rate be fixed?
• Should the import tariff be withdrawn?
• Should European Union subsidise its agriculture or adopt a common
currency?
• Is consumerism good for the economy?

……………. Changes in the society or government policies

– domestic and international