Question

Which statement correctly distinguishes the level of analysis of microeconomics and macroeconomics?

Options

• Microeconomics uses full aggregation; Macroeconomics uses individual rationality.

• Microeconomics uses aggregate indicators; Macroeconomics uses individual supply & demand.

• Microeconomics analyses the whole economy; Macroeconomics analyses parts of the economy.

• Microeconomics analyses parts of the economy; Macroeconomics analyses the whole economy.

Answer 1

Microeconomics analyses parts of the economy, such as individual consumers, firms, and markets. Macroeconomics analyses the whole economy using aggregates.