Exercises 1 General understanding

4. What is, according to the text, the important task of 
macroeconomist?
5. What does macroeconomic analysis attempt to explain?
6. What are the concepts of macroeconomist?
7. What are the most important theories of macroeconomics?
8. What is said about the correlation between the inflation and 
unemployment?
Exercises 2
Translate into Russian:
a) The question asked by the macroeconomist are in terms of broad 
aggregates
b) What determines the capital spending of all firms combined as 
opposed to the decision to build a new factory by single firm?
c) Macroeconomists measure overall economic activity by the use of 
macroeconomic theory
d) Macroeconomic analysis attempts to explain how the magnitudes of 
the principal macroeconomic variables re determined.
e) Considerable effort must first be expended to determine are 
determined.
f) More resent experience suggest the reduction of unemployment to 
5.5 percent of the labor force.
g) Experience teaches that it would not be possible to eliminate 
inflation entirely.
Text B.
Microeconomics
The word “micro” means small, and microeconomics means 
economics in the small. The optimizing behavior of individual units such 
as households and firms provides the foundation for microeconomics.
Micro economists 
may investigate individual markets or even the 
economy as a whole, but their analyses are derived from the aggregation of 
the behavior of individual units. Microeconomic theory is used extensively 
in many areas of applied economics. For example, it is used in industrial 
organization, labor economic subfields. The tools and analyses of 
microeconomics provide a common ground, and even a language, for 
economists interested in a wide range of problems.
At one time there was a sharp distinction in both methodology and 
subject matter between microeconomics and macroeconomics.
The methodological distinction became somewhat blurred during the 1970s 
as more macroeconomic analyses were built upon microeconomic
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foundations. Nonetheless, major distinctions remain between the two major 
branches of economics. For example, the micro economist is interested in 
the determination of individual prices and relative prices (i.e., exchange 
ratios between goods), whereas the macroeconomist is interested more in 
the general price level and its change over time.
Optimization plays a key role in microeconomics. The consumer is 
assumed to maximize utility or satisfaction subject to the constraints 
imposed by income or income earning power. The producer is assumed to 
maximize profit or minimize cost subject to the technological constraints 
under which the firm operates. Optimization of social welfare sometimes is 
the criterion for the determination o f public policy.
Opportunity cost is an important concept in microeconomics. Many 
courses of action are valued in terms of what is sacrificed so that they 
might be undertaken. For example, the opportunity cost of a public project 
is the value of the additional goods that the private sector would have 
produced with the resources used for the public project.

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