Economic Analysis Essentials

What is the primary focus of macroeconomic analysis?

• The overall performance and behavior of an economy.

• Focus on government policies and regulations exclusively.

• Analysis of historical economic data only.

• The study of individual markets and consumer behavior.

Define GDP and its significance in macroeconomics.

• GDP is solely focused on the agricultural output of a nation.

• GDP is an indicator of environmental sustainability.

• GDP measures only the wealth of individuals in a country.

• GDP is a key indicator of economic performance, reflecting the total value of goods and services produced in a country.

What are the main tools used in macroeconomic policy?

• Supply-side policy and labor policy

• Fiscal policy and monetary policy

• Trade policy and exchange rate policy

• Investment policy and regulatory policy

Explain the law of demand.

• The law of demand indicates that quantity supplied increases as price decreases.

• The law of demand indicates that price and quantity demanded are inversely related.

• The law of demand states that higher prices lead to higher quantity demanded.

• The law of demand shows that price and quantity demanded are directly related.

What factors can cause a shift in the demand curve?

• Improvements in technology

• Changes in weather patterns

• Factors that can cause a shift in the demand curve include changes in income, preferences, prices of related goods, population, consumer expectations, and advertising.

• Government regulations on production

Describe the law of supply.

• The law of supply indicates that higher prices result in lower quantities supplied.

• The law of supply suggests that supply is independent of price changes.

• The law of supply indicates that higher prices lead to higher quantities supplied.

• The law of supply states that lower prices lead to lower quantities supplied.

What are the determinants of supply?

• Market demand fluctuations

• Price, production costs, technology, number of sellers, expectations, government policies

• Consumer preferences

• Seasonal trends

How do supply and demand interact to determine market equilibrium?

• Market equilibrium is reached when production costs are minimized.

• Market equilibrium occurs when prices are set by government regulations.

• Market equilibrium is determined solely by consumer preferences.

• Market equilibrium is determined when the quantity supplied equals the quantity demanded.

What are the characteristics of perfect competition?

• Few buyers and sellers

• Differentiated products

• High barriers to entry

• Characteristics of perfect competition include many buyers and sellers, identical products, free market entry and exit, perfect information, and price takers.

Differentiate between monopolistic competition and oligopoly.

• Monopolistic competition has many firms with differentiated products; oligopoly has few firms with interdependent pricing.

• Monopolistic competition has high barriers to entry; oligopoly has low barriers to entry.

• Monopolistic competition involves government regulation; oligopoly operates in a completely free market.

• Monopolistic competition has few firms with identical products; oligopoly has many firms with unique pricing.