SSE20 Module 1
SSE20 Module 1
SSE20 Module 1
ENGAGE
Process question:
EXPLORE
LEARNING CHECK:
1. C.
2. F.
3. E.
4. A.
5. D.
6. B.
7. D.
8. G.
9. I.
10. H.
CRITICAL THINKING
EVALUATION
ASSESSMENT
Quantitative
Provide determinatio
data n.
Quantit
ative
Is feedback from the determi Uses methods and measures
student to the instructor nation. to judge student learning and
about the student's learning. understanding of the material
Use for purposes of grading and
measures. reporting.
Teachers gather information Requires Feedback from the instructor
by giving tests. criteria. to the student about the
Conducting interviews and Are student's learning.
monitoring behaviour. evidence Evaluate the information
Provide consistent results and
driven. gathered to determine what
it must measure what it
claims to measure. students know and
understand.
CREATING
SUMMATIVE ASSESSMENT
Economics is concerned with the well-being of all people, including those with jobs and those
without jobs, as well as those with high incomes and those with low incomes. Economics
acknowledges that production of useful goods and services can create problems of
environmental pollution. It explores the question of how investing in education helps to
develop workers’ skills. It probes questions like how to tell when big businesses or big labor
unions are operating in a way that benefits society as a whole and when they are operating in a
way that benefits their owners or members at the expense of others. It looks at how
government spending, taxes, and regulations affect decisions about production and
consumption.
It should be clear by now that economics covers a lot of ground. That ground can be divided
into two parts: Microeconomics focuses on the actions of individual agents within the economy,
like households, workers, and businesses; Macroeconomics looks at the economy as a whole. It
focuses on broad issues such as growth of production, the number of unemployed people, the
inflationary increase in prices, government deficits, and levels of exports and imports.
Microeconomics and macroeconomics are not separate subjects, but rather complementary
perspectives on the overall subject of the economy.
To understand why both microeconomic and macroeconomic perspectives are useful, consider
the problem of studying a biological ecosystem like a lake. One person who sets out to study
the lake might focus on specific topics: certain kinds of algae or plant life; the characteristics of
particular fish or snails; or the trees surrounding the lake. Another person might take an overall
view and instead consider the entire ecosystem of the lake from top to bottom; what eats
what, how the system stays in a rough balance, and what environmental stresses affect this
balance. Both approaches are useful, and both examine the same lake, but the viewpoints are
different. In a similar way, both microeconomics and macroeconomics study the same
economy, but each has a different viewpoint.
Whether you are looking at lakes or economics, the micro and the macro insights should blend
with each other. In studying a lake, the micro insights about particular plants and animals help
to understand the overall food chain, while the macro insights about the overall food chain help
to explain the environment in which individual plants and animals live.
In economics, the micro decisions of individual businesses are influenced by whether the
macroeconomy is healthy; for example, firms will be more likely to hire workers if the overall
economy is growing. In turn, the performance of the macroeconomy ultimately depends on the
microeconomic decisions made by individual households and businesses.
MICROECONOMICS
What determines how households and individuals spend their budgets? What combination of
goods and services will best fit their needs and wants, given the budget they have to spend?
How do people decide whether to work, and if so, whether to work full time or part time? How
do people decide how much to save for the future, or whether they should borrow to spend
beyond their current means?
What determines the products, and how many of each, a firm will produce and sell? What
determines what prices a firm will charge? What determines how a firm will produce its
products? What determines how many workers it will hire? How will a firm finance its business?
When will a firm decide to expand, downsize, or even close? In the microeconomic part of this
book, we will learn about the theory of consumer behaviour and the theory of the firm.
MACROECONOMICS
What determines the level of economic activity in a society? In other words, what determines
how many goods and services a nation actually produces? What determines how many jobs are
available in an economy? What determines a nation’s standard of living? What causes the
economy to speed up or slow down? What causes firms to hire more workers or to lay workers
off? Finally, what causes the economy to grow over the long term?
Self-Check Questions:
1. What would be another example of a “system” in the real world that could serve as a
metaphor for micro and macroeconomics?
Review Questions:
1. A balanced federal budget and a balance of trade are considered secondary goals of
macroeconomics, while growth in the standard of living (for example) is considered a
primary goal. Why do you think that is so?
2. Macroeconomics is an aggregate of what happens at the microeconomic level. Would it
be possible for what happens at the macro level to differ from how economic agents
would react to some stimulus at the micro level?
FORMATIVE ASSESSMENT
Compare and contrast monetary policy and fiscal policy. Using Venn diagram.