answerstoeven-numberedquestions- pearson higher ed（answerstoeven numberedquestions - pearson higher ed）.doc

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answerstoeven-numberedquestions- pearson higher ed（answerstoeven numberedquestions - pearson higher ed）.doc

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answerstoeven-numberedquestions- pearson higher ed（answerstoeven numberedquestions - pearson higher ed）

Answers to even-numbered questions and questions in boxes in Essentials of Economics (2nd edition) John Sloman Introduction 2. Would redistributing incomes from the rich to the poor reduce the overall problem of scarcity? Yes, to the extent that the gain to the poor is greater than the cost to the rich. Nevertheless, it is difficult to give a categorical answer to this question. It could be argued that ￡1 gained by a poor person is more valuable to them than ￡1 sacrificed by a rich person: the more money you have the less valuable to you is each additional ￡1. If this is so, there would be a net gain in human welfare by such as redistribution. The problem, however, is in comparing one person’s happiness with another: happiness is not something that lends itself to measurement. 4. Which of the following are macroeconomic issues, which are microeconomic ones and which could be either depending on the context? (a) Inflation. (b) Low wages in certain service industries. (c) The rate of exchange between the pound and the euro. (d) Why the price of cabbages fluctuates more than that of cars. (e) The rate of economic growth this year compared with last year. (f) The decline of traditional manufacturing industries. (a) Macro. It refers to a general rise in prices across the whole economy. (b) Micro. It refers to specific industries (c) Either. In a world context, it is a micro issue, since it refers to the price of one currency in terms of one other. In a national context it is more of a macro issue, since it refers to the euro exchange rate at which all UK goods are traded internationally. (This is certainly a less clear–cut division that in (a) and (b) above.) (d) Micro. It refers to specific products. (e) Macro. It refers to the general growth in output of the economy as a whole. (f) Micro (macro in certain contexts). It is micro because it refers to specific industries. It could, however, also help to explain the macroeconomic phe