Microeconomics Versus Macroeconomics

Microeconomics and macroeconomics are two of the largest subdivisions of the study of economics wherein micro- refers to the observation of small economic units like the effects of government regulations on individual markets and consumer decision making and macro- refers to the big picture version of economics like how interest rates are determines and why some countries economies grow faster than others. According to comedian P.J. O’Rourke, â€Å"microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about the money you don’t have, and macroeconomics is about money the government is out of.† Although this humorous observation pokes fun at economists, the description is accurate. However, a closer observation of both fields of economic discourse will provide a better understanding of the basics of economic theory and study. Microeconomics: Individual Markets Those who have studied Latin know that the prefix â€Å"micro-â€Å" means â€Å"small,† so it shouldn’t be surprising that microeconomics is the study of small economic units. The field of microeconomics is concerned with things like consumer decision making and utility maximizationfirm production and profit maximizationindividual market equilibriumeffects of government regulation on individual marketsexternalities and other market side effects Put another way, microeconomics concerns itself with the behavior of individual markets, such as the markets for oranges, the market for cable television, or the market for skilled workers as opposed to the overall markets for produce, electronics, or the entire workforce. Microeconomics is essential for local governance, business and personal financing, specific stock investment research, and individual market predictions for venture capitalistic endeavors. Macroeconomics: The Big Picture Macroeconomics, on the other hand, can be thought of as the â€Å"big picture† version of economics. Rather than analyzing individual markets, macroeconomics focuses on aggregate production and consumption in an economy, the overall statistics that macroeconomists miss. Some topics that macroeconomists study include effects of general taxes such as income and sales taxes on output and pricescauses of economic upswings and downturnseffects of monetary and fiscal policy on economic healtheffects of and process for determining  interest ratescauses for some economies growing faster than other economies To study economics at this level, researchers must be able to combine different goods and services produced in a way that reflects their relative contributions to aggregate output. This is generally done using the concept of the  gross domestic product  (GDP), and goods and services get weighted by their market prices. The Relationship Between Microeconomics and Macroeconomics There is an obvious relationship between microeconomics and macroeconomics in that aggregate production and consumption levels are the result of choices made by individual households and firms, and some macroeconomic models explicitly make this connection by incorporating microfoundations. Most of the economic topics covered on television and in newspapers are of the macroeconomic variety, but it’s important to remember that economics is about more than just trying to figure out when the economy is going to improve and what the Fed is doing with interest rates, its also about observing local economies and specific markets for goods and services. Although many economists specialize in one field or the other, no matter which study one pursues, the other will have to be utilized in order to understand the implications of certain trends and conditions on both the micro and macro economic levels.

Driving On An Open Road - 916 Words

There is something extraordinary about driving on an open road. While listening to your favorite song and watching the scenery change, voyaging into a new adventure. These are my favorite things about traveling; enjoying the journey, not just the destination. Growing up, my family did little traveling. As for our travels comprised of short road trips, lots of laughter, fun and adventure. We were not a privileged family, on the contrary, we were quite the opposite. Although we lacked in the financial department, I do not recall feeling like we did, on account of how much love exists in our family. As I grew older, I took notice of where my friends would spend their summer and winter vacations. On family vacations or exciting excursions. While my vacations were to be spent home. During these days I dreamed of where I would travel to if I had the money. Fast forward to the first time I planned a road trip one summer. Because of seeing pictures of a place called Horseshoe Bend. A remarkable destination, only a few hours from here. For that reason, I grew determined to visit Horseshoe, so, I prepared my journey. While preparing, I had numerous questions: Where do I start? How do I get there? Where do I stay? How long will my visit be? After I began scheduling the dates for my visit, the search for car rentals commenced. As a result, I booked a three-day rental for†¦wait for it†¦you will not believe me†¦twenty-four dollars! I thought I hit the jackpot! This had me thinking, ’howShow MoreRelatedDriving On An Open Road996 Words   |  4 PagesThere’s something incredible about driving on an open road and watching the scenery change while listening to your favorite song or boarding an airplane and getting that sinking feeling in your stomach while taking off, flying into a new adventure. These are some of my favorite things about traveling; enjoying the journey not just the destination. Growing up my family didn’t do much traveling. Our travels consisted of short road trips, lots of laughter, fun and adventure. We weren’t a privilegedRead MoreThe Dangers Of Texting While Driving1561 Words   |  7 Pageswhich this powerful object can be dangerous. Texting while driving is one danger many do not realize until something drastic happens. Texting while driving is not only a threat to us, but as well as other drivers, passengers, and pedestrians. However, with the lack of enforcement on the laws and punishments, the use of cell phones while driving does not come as a threat to drivers, which needs to change. Using a cell phone while driving causes an overwhelming amount of accidents, injuries, and deathsRead MoreThe Concept Of Autonomous Vehicles Essay1336 Words   |  6 Pagesautonomous, or self-driving, vehicles dates back nearly a century. It was first introduced in the 1930s when it graced the pages of science fiction and has continued to be a hot topic ever since (Weber, 2014). 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Texting while driving can be compared to driving while being drunk. The author asserts that 30.2 million persons aged 21 years or older had driven under the influence of alcohol at least once during the past year. (Dubois, et al). As a result, many accidents have taken place by the most of teenagers and adults people who are driving while beingRead MoreTexting While Driving Argumentative Essay773 Words   |  4 PagesEssay Many accidents are blamed on distracted driving and most of the distractions are caused by cell phone usage. However, some opponents feel that creating a law against cell phone use infringes their personal rights. Others think that banning someone from using their cell phones is equivalent to telling someone that they cant adjust their radio or chat with someone else in their car. However, using a cell phone, whether talking or texting, while driving can be extremely dangerous; it should be madeRead MoreDriving While Texting : Distracted Driving992 Words   |  4 PagesDuring 2012-2015, more than 13,000 traffic deaths nationwide were due to distracted driving. It is believed that distracted drivers are 23 times more likely to get into a traffic accident as compared to those who are completely focused on the road. The Ohio State Highway Patrol reports that there were 302,307 motor vehicle crashes in Ohio in 2015. These crashes resulted in 1,110 fatalities. 22 of these fatalities were attributed to drivers who were distracted by their phones, texting, emailing orRead MoreCar Accident Essay879 Words   |  4 Pagescar accident . I didn’t.† In these days a lot of drivers record or photograph how they are speeding up in the streets while driving just for impressing people in social media . People don’t realize that doing those minor things causes severe pains or even death . people are on their phones, sending text messages , driving drank and most of them are having fatigue from driving for long hours or overly stressed after having a though working day, but after having a car accident who is the one to blameRead MoreEssay on Self Driving Automobiles. Is it reality?1040 Words   |  5 Pagesriding in your driverless car heading to the moutains for a weekend away. This is t he future of the automobile in the 21st century and this technology driven by artificial intelleigence is just around the corner. Don’t freak out if driving in Nevada, and you see a car driving by iteself, the state issued the first licence for a self driven car. The vehicle is identified by a red licence plate along with an infinity symbol. Other states including Florida and California have also passed laws to run the

Fin 486 Final Exam Free Essays

Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The primary emphasis of the financial manager is the use of A) cash flow. We will write a custom essay sample on Fin 486 Final Exam or any similar topic only for you Order Now B) profit incentives. C) organization charts. D) accrued earnings. 1) _______ 2) All of the following are key strengths of a corporation EXCEPT A) low organization costs. B) readily transferable ownership. C) limited liability. D) access to capital markets. 2) _______ 3) The ________ is a measure of liquidity which excludes ________, generally the least liquid asset. A) quick ratio; accounts receivable B) current ratio; accounts receivable C) current ratio; inventory D) quick ratio; inventory 3) _______ 4) FASB Standard No. 52 mandates that U.S. based companies must translate their foreign-currency-denominated assets and liabilities into dollars using the A) average rate. B) historical rate. C) current rate. D) none of the above. 4) _______ Table 3.5 A financial manager at General Talc Mines has gathered the financial data essential to prepare a pro forma balance sheet for cash and profit planning purposes for the coming year ended December 31, 2004. Using the percent-of-sales method and the following financial data, prepare the pro forma balance sheet in order to answer the following multiple choice questions. (a) The firm estimates sales of $1,000,000. (b) The firm maintains a cash balance of $25,000. (c) Accounts receivable represents 15 percent of sales. (d) Inventory represents 35 percent of sales. (e) A new piece of mining equipment costing $150,000 will be purchased in 2004. Total depreciation for 2004 will be $75,000. (f) Accounts payable represents 10 percent of sales. (g) There will be no change in notes payable, accruals, and common stock. (h) The firm plans to retire a long term note of $100,000. (i) Dividends of $45,000 will be paid in 2004. (j) The firm predicts a 4 percent net profit margin. Balance Sheet General Talc Mines December 31, 2003 5) The pro forma total liabilities amount is (See Table 3.5) A) $650,000. B) $700,000. C) $500,000. 5) _______ D) $550,000. 6) If a United States Savings bond can be purchased for $29.50 and has a maturity value at the end of 25 years of $100, what is the annual rate of return on the bond? A) 6 percent B) 5 percent C) 7 percent D) 8 percent 6) _______ 7) If a person’s required return decreases for an increase in risk, that person is said to be A) risk-indifferent. B) risk-seeking. C) risk-averse. D) risk-aware. 7) _______ Table 8.5 Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs $50,000 and has installation costs of $3,000. The asset will be depreciated using a five-year recovery schedule. The existing equipment, which originally cost $25,000 and will be sold for $10,000, has been depreciated using an MACRS five-year recovery schedule and three years of depreciation has already been taken. The new equipment is expected to result in incremental before-tax net profits of $15,000 per year. The firm has a 40 percent tax rate. 8) The initial outlay equals ________. (See Table 8.5) A) $44,100 B) $41,100 8) _______ C) $38,800 D) $38,960 Table 9.6 Nuff Folding Box Company, Inc. is considering purchasing a new gluing machine. The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated under MACRS using a five-year recovery schedule and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year 5, the existing machine’s market value would be zero. Over its five-year life, the new machine should reduce operating costs (excluding depreciation) by $17,000 per year. Training costs of employees who will operate the new machine will be a one-time cost of $5,000 which should be included in the initial outlay. The new machine will be depreciated under MACRS using a five-year recovery period. The firm has a 12 percent cost of capital and a 40 percent tax on ordinary income and capital gains. 9) The payback period for the project is (See Table 9.6) A) between 4 and 5 years. B) 2 years. C) 3 years. D) between 3 and 4 years. 9) _______ Table 10.1 A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm’s cost of capital is 10 percent. 10) If the projects have five-year lives, the range of the net present value for Project B is approximately ________. (See Table 10.1.) A) $201,000. B) $255,410. C) $303,280. D) $80,560. 10) ______ 11) The ________ is the firm’s desired optimal mix of debt and equity financing. A) target capital structure B) book value C) cost of capital D) market value 11) ______ Table 14.5 Caren’s Canoes is considering relaxing its credit standards to encourage more sales. As a result, sales are expected to increase 15 percent from 300 canoes per year to 345 canoes per year. The average collection period is expected to increase to 40 days from 30 days and bad debts are expected to double the current 1 percent level. The price per canoe is $850, the variable cost per canoe is $650 and the average cost per unit at the 300 unit level is $700. The firm’s required return on investment is 20 percent. 12) What is the cost of marginal bad debts under the proposed plan? (See Table 14.5) A) $765 B) $5,100 C) $383 D) $3,315 12) ______ 13) Much of the commercial paper is issued by A) venture capitalists. C) small businesses. 13) ______ B) commercial finance companies. D) small manufacturing firms. 14) The part of finance concerned with design and delivery of advice and financial products to individuals, business, and government is called A) Financial Manager. B) Financial Services. C) Managerial Finance. D) none of the above. Table 2.1 14) ______ Information (2005 values) 1. Sales totaled $110,000 2. The gross profit margin was 25 percent. 3. Inventory turnover was 3.0. 4. There are 360 days in the year. 5. The average collection period was 65 days. 6. The current ratio was 2.40. 7. The total asset turnover was 1.13. 8. The debt ratio was 53.8 percent. 15) Inventory for CEE in 2005 was ________. (See Table 2.1) A) $32,448 B) $ 9,167 C) $36,667 How to cite Fin 486 Final Exam, Essay examples