Finance: What are Macroeconomics v. Microeconomics?

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Transcript

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universe the multiverse A You know big macro Well that's

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the basic difference At least a frame of it between

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macroeconomics and microeconomics Big versus small macro economics deals with

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economic principles on a large scale National unemployment rates international

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trade Central bank interest rate decisions tariffs on foreign made

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fuzzy bunny slippers Like those things I have a pair

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micro economics Yet it deals with topics closer to home

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It's about individuals Home mortgages car payments life insurance retirement

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accounts of individuals mostly the retail price of fuzzy bunny

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slippers Right It's also about individual firms like payrolls insurance

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figuring out how many bunny slippers Teo make before Christmas

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But the economy has been slow GDP only edged up

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zero point one percent last quarter and unemployment rates have

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ticked up to their highest level in three years The

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Federal Reserve is worried and his considering lowering interest rates

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Yeah those air concerns of macro economics Bunny slippers cost

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twenty five bucks Regular slippers Cost Fifteen bucks Your daughter

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wants the bunny slippers for Christmas but it's been a

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rough year you know because the weak economy you've got

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laid off a quarry Meanwhile your side gig tuning electric

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bassoons has been slow Can you afford the extra ten

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bucks for the bunny slippers over Just the normal rectangular

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ones right Well that's a question of micro economics for

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the bunny slipper firm While they might see that the

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economy has been slow there are news reports about Cory

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layoffs and the cratering electric bassoon market Earlier in the

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year they bought a large supply of bunny slippers from

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their Chinese manufacturing partner They don't sell enough of them

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Well they'LL get stuck with a bunch of bunny slipper

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inventory they can't get rid of should they drop the

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price of the slippers like cut prices down to twenty

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bucks from twenty five make sure they get rid of

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most of the inventory by Christmas We'Ll those air questions

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of micro economics as well Both types deal with the

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same basic components though the difference has to do with

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scale Both macro and micro economics deal with the function

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of markets For instance the island nation of Macro vain

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eah sees a decline in GDP In a panicked attempt

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to fix the problem the central bank floods a country

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with its currency macro dollars Inflation suddenly spikes All right

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that's a macro economic issue Because inflation has jumped food

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gets more expensive The all you can eat half ear's

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delight meal at the buffet used to be nineteen ninety

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nine But after the spiking inflation while now the price

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rises to twenty nine ninety nine almost overnight you and

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your family now have to decide well how many times

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can we afford that meal per week You used to

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do it four times Well now you'LL have to cut

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down to twice a week and eat homegrown turn ups

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the other two nights Yeah that's a micro problem Another

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example Both micro and macro economics deal with supply and

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demand Macro Vania discovers a small island inside its territorial

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waters It turns out to have a large guano supply

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on it's guano is the droppings of bats or seabirds

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Finding an island full of it probably doesn't seem like

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a big deal but it can be used as you

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know fertilizer Mohr Aggregate supply of guano means prices for

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fertiliser in the country fall right More supply same demand

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Prices fall Also macro Vania is able to export toe

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other countries helping its balance of trade and allowing it

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to bring in more imports That's macro You can use

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that cheap fertilizer to grow more Turn up You sell

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them on the side Teo Get a little extra cash

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Now you can afford one more night of Jeffers Delight

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each week That's micro Well Micro economics doesn't just impact

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households It operates on the scale of businesses as well

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the guano trading firms that scrape it off the small

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island and ship it overseas That's micro the small grocery

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store that buys your excess turn ups Yeah that's micro

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too OK so quick and very dirty Review Macro economics

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It's the big stuff The national economy global trade interstellar

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currency exchange total aggregate demand and supply as it relates

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to inflation gross domestic product national income interest rates unemployment

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and all kinds of changes price levels and liquidity That's

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macro So then we have Micro Micro is all about

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the individual of firm or corporation either smaller big business

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or families and individuals And by the way those recording

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devices the government has implanted in your brain Yeah you

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hope those air microchips and definitely not macro chips That's 00:04:43.842 --> [endTime] not going to feel good in the morning