Some key economic problemsDifferent problems studied by economists: The choice of production -the allocation of scare resources among alternative uses The choice of consumption Economists seek to understand what determines the distribution of a nation’s total output among its people. Who gets a lot, who gets a little, and why? Questions 1 and 2 fall within microeconomics, the study of the allocation of resources and the distribution of income as they are affected by the working of the price system and government policies that seek to influence it. * Unemployment and inflation When an economy is in recession, unemployed workers would like to have jobs, the managers and owners would like to be able to operate their factories, raw materials are available, and the goods that could be produced by these resources are wanted by individuals, but for some reason resources remain unemployed. This means that the economy is operating within its production possibility The world’s economies have often experienced bouts of prolonged and substantial changes in price levels.In recent decades the course of prices has almost always been upward. The 1970s and early 1980s saw accelerating inflation all around the world. Then inflation slowed while unemployment soared. Were these two events related? * The economic growth The capacity to produce commodities to satisfy human wants grows rapidly in some countries, slowly in others, and actually declines in still others If any economy’s capacity to produce goods and services is growing, combinations that are unattainable today will become attainable tomorrow. Growth makes it possible to have more of all goods. Questions 3 and 4 fall within macroeconomics, the study of the determination of economic aggregates such as total output, total employment, the price level, and the rate of economic growth
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