Reading. Read the text and check whether you answered the Lead-in questions correctly

Read the text and check whether you answered the Lead-in questions correctly.

Economics is the science that deals with production, allocation, and use of goods and services. It is important to study how resources can best be distributed to meet the needs of the greatest number of people. As we are more connected globally to one another, the study of economics becomes an extremely important issue.

Economics is a broad subject that can be divided into two areas: microeconomics and macroeconomics.

Microeconomics, the study of the economic behaviour of small economic groups such as firms and families, is one of the largest subfields in economics. Microeconomics deals with economic decisions made at a low, or micro, level. It is the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions affect others.

Microeconomics asks questions: “How do individuals make consumption decisions?”, “How do firms make profits and price their goods and services?”, etc.

“Macro” means “large”. Macroeconomics is the field of economics that studies the behaviour of the economy as a whole, not just specific companies, but entire industries and economies. This area of economics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics asks questions like: “What causes inflation?”, “What effect does the national debt have on economic growth?”, etc.

So, macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. These two studies of economics are different, but they are interdependent and complement each other. The factors that are studied by macro- and microeconomics often influence each other.