Unit 1 AOS 1

Unit 1 AOS 1 Economics

Microeconomics

• Looks at the factors that influence the small bit, units or various parts making up the overall Australian economy including decisions made by individual consumers or single firms.

Macroeconomics

Looks at the whole economy and the larger flows affecting overall economic conditions in the country: booms, then the economy is growing fast, or recessions, when there is a downtown in the economy.

Examples of microeconomics

• The operations of a particular firm

• The nature of a single industry

• The output, employment and prices in an individual market

examples of macroeconomics

• Total value of national spending 

• Total value of national production

• National level of unemployment

• Nation's inflation rate

Differences between microeconomics and macroeconomics

Microeconomics:

• Market

• Effect of prices of goods

• Labour market

• Consumer behaviour

• Supply of goods

Macroeconomics:

• GDP, Gross Domestic Product

• Inflation

• Employment/unemployment

• Aggregate demand

• Capcity of economy

Positive economic analysis

• Analysis of issues or questions that can be either proved or disproved beyond doubt. Largely based on verifiable facts that can be tested.

Normative economic Analysis

Involves statements about what should be done, personal opinions, likes and dislikes.

Differences between Positive and normative economical analysis

Positive:

• Free of personal opinion

• Based on facts

• Can be proved or disproved

• Connects cause and effects

• Descriptive

• Objective

Normative:

• Based on values opinion

• Based on value judgments

• About the way things should be

• Cannot be proved or disproved

• Prescriptive

• Subjective

Define economics

• Study of human behaviour.

• It looks at the ways that individuals, families, businesses and governments make decisions or choices about how to use their limited resources to satisfy their needs and unlimited wants, and in the process improve the wellbeing or living standards.