Economics Exam: Difference between Macro and Micro Economics, Monetary and Fiscal Policy, Types of Growth, Domestic Policy

This study material covers topics such as difference between macro and micro economics, effectiveness of monetary and fiscal policy, types of growth, and domestic policy. It includes definitions, examples, and explanations to help you prepare for your economics exam. The subject is Business Environment and the course code is not mentioned. The content is relevant for students in any college or university.

BUSINESS
ENVIRONMENT

Table of Contents
MAIN BODY...................................................................................................................................3
Question 1........................................................................................................................................3
Presenting difference and relation between macro and micro economics..................................3
Question 2........................................................................................................................................4
The effectiveness of monetary and fiscal policy under the fixed and floating exchange rates:. .4
Question 3........................................................................................................................................5
Presenting different type of growth............................................................................................5
Question 4........................................................................................................................................6
REFERENCES................................................................................................................................8

MAIN BODY
Question 1
Presenting difference and relation between macro and micro economics
Economics is divided into two different categories such as micro and macro. The micro
economy is the study of specific segment of market and it include issues like consumer behavior,
labor market and theory for firms. Whereas, macroeconomics is known is as study as whole
economy and the variables such as aggregate demand, national output and inflation rate.
Moreover. Micro focus on the choices made by the individual consumer as well as businesses
concerning the fluctuating cost of services and goods in the economy (Patrick,2019). Thus, it
covers areas such as supply and demand for goods in different market places, consumer behavior
and demand for service and labor. It also covers wage of employee and its main feature is that
focus on normal situation of market area and on certain condition as well as it make use of
bottom up approaches to evaluate the economy. Moreover, different components of micro
economy market demand supply, customer behavior, Producers and driven individual
preferences as well as market particular labor market.
Whereas, macroeconomics is known as study of nation and whole economy as it has wider
scope. It consists of policies and other influencing factors that affect GDP rate as whole
(Cincotti, Raberto, and Teglio, 2022). It mainly includes top down approach and it includes
tactics like the economic growth of a country, reason for unemployment and inflation, fiscal
policies like interest rate, effect of globalization and reason that affects economic growth amount
countries.
The main components of macro economy are national output, unemployment and
inflation. Thus, it can have stated that macro and micro are different from each other. In addition
to this, it has been found that both the economics are not interrelated but depended on each other
mutually as there is close connection between both the term. All microeconomics studies can
help in evaluating the understanding of macroeconomics variables as well as study will also
contribute in formulating of economics policies and programs (Bakieva, Azamov,and Sodikov,
2019). Both share inter connected relation as for building the economy the result of both large
and small scale element affect each other or directly affected by each other. For example:

Increase in tax in macro economy will impact firms saving is a macroeconomics analysis.
Another example is if we analyst the price of commodity and determine the role of buyer and
seller then it will lead in analyzing the changes that take place in general price level of
commodity in economy as whole.
Question 2
The effectiveness of monetary and fiscal policy under the fixed and floating exchange rates:
The targets of the exchange rate is the monetary policy. The fixed exchange rate under
the fiscal policy to determine the monetary policy and maintain the effectiveness of the fiscal
policy. The monetary policy causes the inflation and exchange rates. The current monetary
policy and future expected monetary policy have string effects on the nominal exchange rates
and maintain the domestic economy with the in international competitiveness. It is the control of
the money quantity in the economy as well as the channels which helps in supply the money. The
main aims of the monetary bank is influence the factors such as rate of consumptions, inflations,
economic growth and the overall liquidity of economics (Rigon and Zanetti, 2018). The fiscal
policy refer as the use of the government which are taxation and spending to determiner the
economy and increase the growth rate of the economy. The government of the country use the
fiscal policy to enhance the sustainable growth and promote the strong as well as it helps in
reduce the poverty of economy. The fiscal policy with the floating exchange rate is access
the model AA-DD to effects the fiscal policy systems. The fiscal policy in the floating exchange
rate means change the policies of the governments changing such as changes in the taxes,
transfer payments, state and local governments are also represents the fiscal policy changes. In
the expansionary fiscal policy is referred the governments transfer and spending are increase as
well as revenue are also decreased. The expansionary fiscal policy in the AA-DD model with the
exchange rate of floating is effectively changed by the governments. The fiscal policy under the
fixed exchange rate is as the contractionary fiscal policy which cause the no changes in the
exchange rate of the economy as well as decrease in the GNP in the short run. If the GNP will
decrease it will cause the current account balance which are increase (Siregar, 2021). The fiscal
policy in the fixed exchange rate corresponds the decrease in the trade deficit and increase in the
trade surplus.
The monetary policy effective under the fixed exchange rates as given the independent monitory
policy and the use of monetary policy to target the domestic inflations as well as try to smooth

the domestic business cycle. The independent monetary policy is the capital controls which are
prevents to the selling and buying of domestic currency. The monetary policy with the floating
exchange rate decrease in the money supply.
Question 3
Presenting different type of growth
Firms grow because it is able to fulfill the needs of the customer and it return it gets money
which helps in increasing the profit of the firm. Along with this, every company seek growth in
one or another way as every organization has their own strategy which can be implemented to
increase the sales and profit. Moreover, the strategy that business used to implement the strategy
in market and it depend on the financial situation as well as competition. Although business
means growth and growth are measured in terms of increased profit and enhancing market share.
There are various types of growth such as organic and it is one of the most common as well as
effective means of growing company (Alvarez, Lippi, and Oskolkov 2022). Moreover, this type
of business growth focuses on manufacturing increased services and products that leads in
success of the business. Although organization that make use of organic growth will tend to buy
large store and expand business in order to get output of products. Another form is strategic
business growth that focus on long term growth of company and it has been used to reach a
market by using additional products and advertising power.
Profit maximization refers to the capacity of the business to earn the maximum profit by
incurring low cost which is the main purpose of the business in order to survive in the
competitive market. The business maximizes their profit in that situation where the value of the
last unit of the product is equivalent to the cost of producing the last unit of the production of the
business. In order to expand and diversify the business the company has to focus on various
factors that can result in to profit maximization by reducing the cost and effective utilization of
the resources(Kirkpatrick, Sirageldin, and Aftab, 2020). In order to to growth and survive in the
market , organization has to focus on the differentiation or product development which can be
effectively achieved through making effective strategies and plans and proper implementation of
these while carrying out the business effectively. Every company wants to grow and expand their
business in various countries which also help in increasing the profit and also increase the base
of the customers. It is observed that for long term sustainability it is necessary for the business to

continuously evaluate the market factors and make decisions accordingly which helps in
increasing the brand image and profit maximisation.
Question 4
Domestic policy is refers to the public policy that help for overseeing administrative
decision which are directly related to the all issues and activity that are within borders. This is
totally differed from the foreign policy that is more focus on government interest in the external
policies. This is also covered wide range of areas which are related to the business, education,
law enforcement, energy, money and taxes etc. The government has taken the policy in order to
provide benefit to public so that they can not migrate to other countries, when people go outsides
for studies or job it impacts on domestic country by low GDP (Danzman, 2020). That is why
government has taken the policy that are help for achieving goals related to growth, price
stability and full employment. Further, there are different type of approaches which are used by
government in order to build the social security in order to focus more on building support to
public in order to provide them security to widows orphans, children by providing them
advantage so that they can get benefit in employment, education and subsidiary. Also, to UK
government has established as system of social insurance in which taxes on payrolls were used to
provide benefits to the elderly. Also, social security are help public in order to expand benefits
for survivors including dependent children, widows, orphans (Forero-Laverde, 2019). That kind
of benefit are help public in order to more focus on reducing consumer price that is helps public
by not migrate. On the apsis of globalization it has been analysed that increasing the trade benefit
of education policy in order to enhance the level of globalization by providing high quality of
education to prove the society. This kind of policy adopt by government in order to lower the
costs of globalization.
The globalization education are necessary for the development and economic and political
policies. It helps in provide the high quality of educations for bring the marginal and rural people
to develop the national economic. It is related to the expansion of the higher and secondary
education that decrease the globalization and helps the economy in the growth. On the basis of
regulatory policies, it helps in focus on the maintenance of the social and actions of the society.
This helps in typically accomplish the enacting policies in the economy and laws which are
related to the banning and individuals companies that are beneficial o for the domestic purpose.

REFERENCES
Books and journals
Alvarez, F., Lippi, F. and Oskolkov, A., 2022. The macroeconomics of sticky prices with
generalized hazard functions. The Quarterly Journal of Economics, 137(2), pp.989-
1038.
Bakieva, I.A., Azamov, A. and Sodikov, I., 2019. DIFFERENCE BETWEEN MICRO AND
MACROECONOMICS. Мировая наука, (4), pp.20-23.
Cincotti, S., Raberto, M. and Teglio, A., 2022. Why do we need agent-based
macroeconomics?. Review of Evolutionary Political Economy, 3(1), pp.5-29.
Kirkpatrick, C., Sirageldin, I. and Aftab, K., 2020. Financial development, economic growth,
and poverty reduction [with Comments]. The Pakistan development review, pp.363-
388.
Mitchell, W., Wray, L.R. and Watts, M., 2019. Macroeconomics. Macmillan International
Higher Education.
Patrick, H.T., 2019. Financial development and economic growth in underdeveloped
countries. Economic development and Cultural change, 14(2), pp.174-189.
Razuvaeva, E.B., Starun, N.V. and Elkina, L.G., 2019, April. Digital Economy as a Way to
Ensure Economic Growth. In International Scientific Conference “Digital
Transformation of the Economy: Challenges, Trends, New Opportunities” (pp. 116-
127). Springer, Cham.
Reis, R., 2018. Is something really wrong with macroeconomics?. Oxford Review of Economic
Policy, 34(1-2), pp.132-155.
Syverson, C., 2019. Macroeconomics and market power: Context, implications, and open
questions. Journal of Economic Perspectives, 33(3), pp.23-43.
Wagner, R.E., 2020. Macroeconomics as systems theory. Springer International Publishing.
Cincotti, Raberto, and Teglio, 2022)(Kirkpatrick, Sirageldin, and Aftab, 2020) (Mitchell,
Wray, and Watts 2019)(Patrick,2019) (Razuvaeva, Starun, and Elkina,2019)(Reis,
2018) (Syverson,