Oversupply

And finance Allah shmoop What Our macro economics versus micro

economics Alright people Hedgehogs bumble bees raindrops dust bunnies Bedbugs

Bacteria protons corks you know Small micro the Empire State

Building the pyramids the Great Wall The you the continent

of Asia the Earth the solar system the galaxy the

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

the basic difference At least a frame of it between

macroeconomics and microeconomics Big versus small macro economics deals with

economic principles on a large scale National unemployment rates international

trade Central bank interest rate decisions tariffs on foreign made

fuzzy bunny slippers Like those things I have a pair

micro economics Yet it deals with topics closer to home

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

accounts of individuals mostly the retail price of fuzzy bunny

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

figuring out how many bunny slippers Teo make before Christmas

But the economy has been slow GDP only edged up

zero point one percent last quarter and unemployment rates have

ticked up to their highest level in three years The

Federal Reserve is worried and his considering lowering interest rates

Yeah those air concerns of macro economics Bunny slippers cost

twenty five bucks Regular slippers Cost Fifteen bucks Your daughter

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

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

laid off a quarry Meanwhile your side gig tuning electric

bassoons has been slow Can you afford the extra ten

bucks for the bunny slippers over Just the normal rectangular

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

the bunny slipper firm While they might see that the

economy has been slow there are news reports about Cory

layoffs and the cratering electric bassoon market Earlier in the

year they bought a large supply of bunny slippers from

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

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

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

price of the slippers like cut prices down to twenty

bucks from twenty five make sure they get rid of

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

of micro economics as well Both types deal with the

same basic components though the difference has to do with

scale Both macro and micro economics deal with the function

of markets For instance the island nation of Macro vain

eah sees a decline in GDP In a panicked attempt

to fix the problem the central bank floods a country

with its currency macro dollars Inflation suddenly spikes All right

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

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

delight meal at the buffet used to be nineteen ninety

nine But after the spiking inflation while now the price

rises to twenty nine ninety nine almost overnight you and

your family now have to decide well how many times

can we afford that meal per week You used to

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

down to twice a week and eat homegrown turn ups

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

example Both micro and macro economics deal with supply and

demand Macro Vania discovers a small island inside its territorial

waters It turns out to have a large guano supply

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

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

a big deal but it can be used as you

know fertilizer Mohr Aggregate supply of guano means prices for

fertiliser in the country fall right More supply same demand

Prices fall Also macro Vania is able to export toe

other countries helping its balance of trade and allowing it

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

that cheap fertilizer to grow more Turn up You sell

them on the side Teo Get a little extra cash

Now you can afford one more night of Jeffers Delight

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

households It operates on the scale of businesses as well

the guano trading firms that scrape it off the small

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

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

too OK so quick and very dirty Review Macro economics

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

currency exchange total aggregate demand and supply as it relates

to inflation gross domestic product national income interest rates unemployment

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

macro So then we have Micro Micro is all about

the individual of firm or corporation either smaller big business

or families and individuals And by the way those recording

devices the government has implanted in your brain Yeah you

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