Microeconomics and Macroeconomics Economics is generally divided into two main areas: microeconomics and macroeconomics.
Microeconomics looks at the behaviour of consumers and businesses in different types of markets to try and understand their decision making processes. In order to do this the relationships between demand, supply and the price of goods and services are examined.
Macroeconomics looks at the decisions made at national and international level by governments and bodies such as the European Union to understand how the economy works as a whole. It includes areas such as the level of economic activity, price increases, interest rates, unemployment, income distribution and environmental sustainability.
The two main areas studied by economists: Microeconomics
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Demand and supply of goods Markets
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Macroeconomics Economic indicators The role of government The international economy
Chapter Review Key Terms Checklist Using a pencil, place a ¸ in each box to indicate how well
you know and understand each Key Term. q I know and understand this Key Term.
q I am still a bit uncertain about what this Key Term means. q I don’t understand this Key Term yet.
When you revise each chapter, tick the boxes again to indicate how much you have learned.
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Economics is the study of how people with limited resources make decisions as they attempt to satisfy their essential needs and unlimited wants.
The factors of production are land, labour, capital and enterprise.
Land is anything provided by nature which is used in the production of goods and services.
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Labour is any human effort which goes into the production of goods and services.
