Macroeconomic Consequences Of Mr. Trump's Economic Policy
1. What is the difference between micro and macroeconomics?
Economics covers a large area of economic concerns and is divided into two parts: Microeconomics and Macroeconomics. Microeconomics studies the actions of the individual actors within the economy, such as buyers, sellers, and businesses. Additionally, microeconomics allows the actors to differentiate the values from one decision to another. While macroeconomics examines a larger picture of the economy by studying the employment, incomes, inflations, gross domestic product, input and export, and environment (Rice University, n.d).
An example of microeconomics phenomenon is how we invest our time despite scarcity. We all have 24 hours a day, 7 days a week, and 365 days a year. Instead …show more content…
of hanging out with friends, watch a movie, or participating in your favourite sports over the weekend, we chose to expand our knowledge through higher education. This choice is an economic decision. We hope by investing our time in higher education, will open new doors to new jobs with higher wages.
An example of macroeconomics phenomenon is the study of inflation by economists and people at the Central Banks. The Central Bank may decide to increase the interest rates to prevent the economy from overheating and to fight inflation. This economic decision will affect the market as a whole and not just the individual actors.
2. Find a recent article that you find that is relevant to this section. Provide a summary of the article and discuss in a few words why you found the article interesting.
A recent article “The Macroeconomic Consequences of Mr.
Trump’s Economic Policies” (https://www.economy.com/mark-zandi/documents/2016-06-17-Trumps-Economic-Policies.pdf) was found to be relevant for this paper. This article examines the possible macroeconomic impact caused by President Donald Trump’s economic policy. In Summary, Mr. Trump’s Economic Policies includes reduction of corporate and personal income tax, increased of health care spending on veterans, building a wall between the United States (U.S) and Mexico border, deportation of non-U.S. immigrants, back tracking on globalization by renegotiating the trade deals with its two largest trading partners – Canada and Mexico, and the termination of the Trans-Pacific Partnership (TPP) agreement with 11 other nations. In addition, the possibility of trade tariff war between its trading partners (Zandi et al., …show more content…
2016).
This article demonstrated how economic policies at macroeconomic level can have a huge impact on the U.S economy as well as globally. This is largely due to the U.S. being the largest economy in the world with a huge appetite for goods and services. Controversially, many of these economic policies have gotten many of the world leaders’ concerns, as the saying goes “if the U.S. sneezes, the rest of the world catches a cold”.
3.
Provide an example of a sunk cost. How does this differ from a marginal cost?
A sunk cost is costs that have already incurred and can no longer be recovered. Hence it is irrelevant in the current decision process. Thus the marginal cost is the additional cost incurred in producing one more unit or servicing one more customer (Economics Online, n.d). To illustrate this, a firm has purchased a production machine for $100,000. This purchased is a sunk cost. As for the marginal cost, if the total cost of producing one unit of product A is $10 and the second unit cost $8, then the marginal cost of producing the second unit is $8.
An example of a time I used marginal analysis to solve a problem was when I examined the costs of third party logistics. The cost of third party logistics continued to grow as our business volume grew. I used marginal analysis to calculate the cost of owning our own trucks, recruits our drivers, vehicle maintenance, insurance etc. to determine whether the cost would be lower than the third party logistics as our volumes continue to
grow.
Economics covers a large area of economic concerns and is divided into two parts: Microeconomics and Macroeconomics. Microeconomics studies the actions of the individual actors within the economy, such as buyers, sellers, and businesses. Additionally, microeconomics allows the actors to differentiate the values from one decision to another. While macroeconomics examines a larger picture of the economy by studying the employment, incomes, inflations, gross domestic product, input and export, and environment (Rice University, n.d).
An example of microeconomics phenomenon is how we invest our time despite scarcity. We all have 24 hours a day, 7 days a week, and 365 days a year. Instead …show more content…
of hanging out with friends, watch a movie, or participating in your favourite sports over the weekend, we chose to expand our knowledge through higher education. This choice is an economic decision. We hope by investing our time in higher education, will open new doors to new jobs with higher wages.
An example of macroeconomics phenomenon is the study of inflation by economists and people at the Central Banks. The Central Bank may decide to increase the interest rates to prevent the economy from overheating and to fight inflation. This economic decision will affect the market as a whole and not just the individual actors.
2. Find a recent article that you find that is relevant to this section. Provide a summary of the article and discuss in a few words why you found the article interesting.
A recent article “The Macroeconomic Consequences of Mr.
Trump’s Economic Policies” (https://www.economy.com/mark-zandi/documents/2016-06-17-Trumps-Economic-Policies.pdf) was found to be relevant for this paper. This article examines the possible macroeconomic impact caused by President Donald Trump’s economic policy. In Summary, Mr. Trump’s Economic Policies includes reduction of corporate and personal income tax, increased of health care spending on veterans, building a wall between the United States (U.S) and Mexico border, deportation of non-U.S. immigrants, back tracking on globalization by renegotiating the trade deals with its two largest trading partners – Canada and Mexico, and the termination of the Trans-Pacific Partnership (TPP) agreement with 11 other nations. In addition, the possibility of trade tariff war between its trading partners (Zandi et al., …show more content…
2016).
This article demonstrated how economic policies at macroeconomic level can have a huge impact on the U.S economy as well as globally. This is largely due to the U.S. being the largest economy in the world with a huge appetite for goods and services. Controversially, many of these economic policies have gotten many of the world leaders’ concerns, as the saying goes “if the U.S. sneezes, the rest of the world catches a cold”.
3.
Provide an example of a sunk cost. How does this differ from a marginal cost?
A sunk cost is costs that have already incurred and can no longer be recovered. Hence it is irrelevant in the current decision process. Thus the marginal cost is the additional cost incurred in producing one more unit or servicing one more customer (Economics Online, n.d). To illustrate this, a firm has purchased a production machine for $100,000. This purchased is a sunk cost. As for the marginal cost, if the total cost of producing one unit of product A is $10 and the second unit cost $8, then the marginal cost of producing the second unit is $8.
An example of a time I used marginal analysis to solve a problem was when I examined the costs of third party logistics. The cost of third party logistics continued to grow as our business volume grew. I used marginal analysis to calculate the cost of owning our own trucks, recruits our drivers, vehicle maintenance, insurance etc. to determine whether the cost would be lower than the third party logistics as our volumes continue to
grow.