1. Q2. Indicate which of the following economic issues reflect microeconomic topics and which
reflect macroeconomic topics? a. Why the unemployment rate in Canada in 2012 was slightly
higher than in the U.S. b. The causes of the 1929 Great Depression c. The impact of a decrease in
government spending in Greece d. The impact of an increase in taxes on beer consumption e.
The reasons explaining the differences in labour productivity between Spain and Poland f. The
impact the snowstorm experienced two weeks ago in Halifax had on the sale of winter tires g.
Why cell phone service plans in Canada cost more than in Morocco h. The economic impact of
promoting education for girls in Pakistan
Solution
Microeconomics studies the behavior at the individual level, like consumers and firms. On the
other hand, macroeconomics studies economic behavior at macro or aggregate level, like, output,
employment, income, public expenditure, etc.
a. Since it studies the economic output of a country, therefore the mentioned issue falls under
macroeconomics.
b. The cause of great depression deals with the aggregate indicators of the economy, hence the
issue falls under macroeconomics.
c. The issue of government expenditure falls under the macroeconomics.
d. Since, the demand for beer consumption comes from individual, therefore, the issue falls
under microeconomics.
e. The labor productivity at state level is studied in macroeconomics.
f. The sales of winter tires highlights the activity of firms in certain industry, hence it falls under
microeconomics.
g. The cost structure of phone service between the two countries is analyzed under
microeconomics.
h. The education is a kind of investment for future economic growth, hence comes under
macroeconomics.