eco1 - * What is Economics? - "Theory of...

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* What is Economics? - "Theory of Efficiency." * Purpose of Economics - To explain economic phenomena. < Microeconomics and Macroeconomics > The economic phenomena can be divided into two categories. * Microeconomics - to explain the economic behavior of individual - the main question is "How are the prices of goods determined?" (Price theory) - to answer this question, the followings will be asked: "How is the demand for a good determined?" "How is the supply of a good determined?" "How does the market work to set the equilibrium price of a good?" * Macroeconomics - to explain the economic problem of an economy in the aggregate (a nation) - the main question is "How is the GNP determined?" (National Income Theory) "Why is the U.S richer than Mexico?" "How is the aggregate price level determined?" "What causes inflation?" "How much money should be supplied by the central bank?" "How is the unemployment rate determined?" So, microeconomics finds the causes of the macroeconomic consequences.
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eco1 - * What is Economics? - &quot;Theory of...

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