Macroeconomics and Microeconomics: Description and Difference

Answering question

Table of Contents
QUESTION 1..................................................................................................................................1
a. Description of macroeconomics and micro economics:..........................................................1
b. Difference between comparative and absolute advantage:......................................................1
c. Impact of international trade and globalization on emerging economy:.................................1
QUESTION 2..................................................................................................................................2
a. Open market operations...........................................................................................................2
b. Measures used by government to control money supply in market........................................2
Question 3........................................................................................................................................3
a. Detailed evaluation of the change in supply and change in quantity supplied including the
factors that affects them...............................................................................................................3
b. Detailed evaluation of the change in supply and change in quantity supplied including the
factors that affects them...............................................................................................................3
Question 4........................................................................................................................................4
a. Income elasticity of demand....................................................................................................4
b. Cross elasticity of demand.......................................................................................................4
REFERENCES................................................................................................................................5

QUESTION 1
a. Description of macroeconomics and micro economics:
Macroeconomics can be explained as a economic branch that deals with performance
and structure of economy as a whole (Candela and Geloso, 2018). Hence, it can be stated that
macroeconomics deals with an economy at large scale. It studies overall economy that
incorporates market as well as other systems which is operated at large scale. Economic wide
phenomenon is studied in macroeconomics, for example, level of price, economic growth rate,
inflation, national income, unemployment rate as well as gross domestic product. Two vital
macroeconomic areas are long term growth of economy and short term business cycle.
Micro economic can be described as a study of households, individuals as well as firms in
context to decision making and resource allocation. It is termed as a social science that evaluates
decision or incentive implications and its effect on distribution or utilization of resources. It
showcases how different types of goods pertains different values and also studies ways in which
businesses or individuals conducts or benefits from effective production or exchange. Along with
it, coordination or corporation of individuals with one another is also studied (Capello, 2015).
Overall, it can be noted that micro economics deals with production or pricing in a single market.
Hence, production, consumption as well as exchange of resources by individuals and firms is its
focus area.
b. Difference between comparative and absolute advantage:
Absolute advantage refers to a capability of person, organization, region or country in
context to production of higher quality of goods and services along with input of same quantity
at per unit time.
Comparative advantage can be described as an ability of economy for producing
particular product at low opportunity cost in comparison to its trading partners (Goodstein and
Polasky, 2020). It provides ability to an organization for selling goods or services at low price
than existing competitors and enjoy enhanced sales margin.
c. Impact of international trade and globalization on emerging economy:
Globalization can be explained as a increment in interdependence on economies of world
which results in enhancement in cross border trading, international capital flow and rapid
technological spreading. While considering impact of international trade or globalization on
1