Economics 1302: Macroeconomics Lé Kién & Nguyén Tra My PART 1 Concept 1 - Microeconomics vs. Macroeconomics Microeconomics ~ The study of individual choice under scarcity and its impli- cations for the behavior of prices and quantities in individual markets Macroeconomics — The study of the performance of national economies and the policies that governments use to try to improve that performance: Aggregation — Adding up of individual economic variables to obtain economy- wide totals. An important tool that macrocconomists use to link individual behavior (micro) to national economic performance (macro). 1. Government actions designed to affect the performance of the economy as a whole are called policies. a, microeconomic b, macr: roeconomic 2. “How has employment in the construction industry in Vietnam changed over the last 12 months?” is an example of a question. a, microeconomic b, macroeconomic 3. “The European Central Bank said the euro zone grew faster than expected in the first half of the year, and raised its growth forecast for the bloc for 2017, to 2.2% - the fastest pace in ten years.” This is an example of a nows item about a issue. a. microeconomic b, macrocconomic 4. Which of the following would be studied by macroeconomists? a. The effect of government subsidies on sugar prices b. The effect of rent controls on housing prices in New York City ¢, Inflation in developing countriesConcept 2 - Macroeconomies Issues: Standard of Living Standard of Living — The degree to which people have access to goods and services that make their lives easier, healthier, safer, and more enjoyable. * S.o.L can be measured by GDP per Capita GpP GDP per Capita - =————_ per Sap Population # S.oL is determined by Average Labor Productivity GDP, Average Labor Productivity = —————____ 8 'Y ~ Number of people employed e have to goods and services that mal 1. The degree to which peop their lives easier, healthier, safer, and more enjoyable is called jhe microeconomic standard he global standard c. the scarcity standard d. the standard of living 2. The standard of living in an economy is best measured by a. average labor productivity b. GDP ¢. GDP per capita d. the inflation rate 3. GDP per employed worker is called a. total output b. average standard of living ¢. average labor productivity d. the inflation rate 4, From largest to smallest, rank the amounts of [GDP per capital, [ave labor productivity], and [GDP]. The order is > > a, (GDP per capital; [average labor productivity]; [GDP] GDP per capita] (GDP; [GDP per capita]; [average labor productivity] b, [GDP]; [average labor productivity]5. Suppose the population and the number of employed workers are constant, if average labor productivity decreases, then GDP a. increases b. decreases remains constant 6. If living standards in Vietnam increase, then GDP must have increased population increased. a, more rapidly than , at the same rate that c. more slowly than 7. The country of Northland produced $1,000 billion of SDP in one year. ‘The population of Northland was 100 million, of whom 50 million were employed. What was average labor productivity in Northland? a, $10,000 b. $15,000 . $20,000 8. The value of GDP was $1,000 billion in Northland and $2,000 billion in Southland. The population of Northland was 100 million and the population of Southland was 200 million. There were 50 million employed workers in Northland and 80 million employed workers in Southland. Average labor productivity was higher in and the standard of living was a. Northland; the same in both countries b. Northland; higher in Northland c. Southland; the same in both countries 4. Southland; higher in Southland Concept 3 - Macroeconomics Poli s and Analyses Why standard of living vary markedly among nations? What are the sources of recessions and expansions? What causes unempl ment policy is one of the most important factor!!! ment and inflation? Govern- Macroeconomic Policy — Government policies that affect the performance of the economy as a whole. There are three major types * Monetary Policy — Regulating the nation's money supply, determined by th e, European Central Bank) Central Bank (e.g. Federal Reser © Fiscal Policy — Regulating the government’s budget, determined by the Congress.© Structural Policy — Changing the underlying structure or institutions of the nation’s economy. Policy Analysis — Analyzing the effets of a proposed policy. There are two types including positive and normative analyses. © Positive Analyses — Addresses the economic consequences of a particular policy, not whether thos consequences are desirable # Normative Analyses — Addresses the question of whether a policy should be used; normative analysis inevitably involves the values of the person doing the analysis 1. For each statement below, choosing between [Monetary Policy], [Fiscal and [Structural Policy} * Decision 1729 of the State Bank of Vietnam sets the maximum interest rate for deposits in VND. # Session 52 of the National Assembly passed a decree to convert 2 projects of the North - South expressway to public investment # The Airline Deregulation Act is a 1978 United States federal law that deregulated the airline industry in the United States, removing U.S. federal government control over such areas as fares, routes and market entry of new airlines. 2. Choosing between [Positive Analysis] and [Normative Analysis] # When the Federal Reserve undertakes the open market sale of gov- ernment bonds, interest rates increases, © The European Central Bank should act decis # The airline Deregulation Act 1978 was followed by a great increase iwely to reduce inflation, in the number of flights, a decrease in fares, and an increase in the number of passengers and miles flown. © The airline industry should be re-regulated to protect Vietnamese consumers.