Understanding the study of Economics
What is microeconomics?
The study of the individual parts of the economy, the household and the firm, how prices are determined and how prices determine the production, distribution and use of goods and services.
What is Macroeconomics?
The study of the sum total of economic activity, dealing with the issues of growth, inflation0 and unemployment and with national economic policies relating to these issues.
Let me assume that the study of economy is like looking at a forest. The government is the forest and the trees are either consumers or firms.Microeconomics is to look at the individual trees to analyze or understand the overall economic situation. Macroeconomics is to look at the whole forest from the airplane.
Microeconomics is close to our daily life - what we buy, how we spend, how much we get paid.
Macroeconomics is more like the nationwide information, which we hear from masmedia daily such as the decision or investment in public sector, the ups and downs of unemployment rate, the trend of monetary market or how the world trades are doing.
Macroeconomics has three players, which are government, corporation and household. The growth of GDP, CGPI (corporate goods price index), the interest rate, or the rate of unemployment are used as the tools to see the economic situation of the countries.
There are three markets in Macroeconomics.
1. Produce market
2. Monetary market
3. Labor market
Keywords of the above markets are as follows:
1. Produce market: equity and labor, GDP (Gross Domestic Products), consumer and investment, consumer price.
2. Monetary market: money supply, currency and interest rates.
3. Labor market: worker, unemployment rate, employer and wages.
Economy in Japan
In order to lubricate the economy, the government tries to expand of public investment. The corporations...