Question

Designing models that explain the impact of inflation in the economy is a topic that would be studied by a macroeconomist or a microeconomist? Explain

Answer 1

Answer: macroeconomist

Inflation is the rising price level of an economy. Impacts of inflation are the decrease in unemployment rate, the decrease in purchasing power of currency, the increase in cost of living, and the increase in spending. All these are macroeconomic parameter, since these cover the whole economy.

Examples:

#) suppose as the inflation increases, consumers of the economy have to purchase more for survival; here the individual consumer behavior is not considered (a particular consumer may not have higher purchase, which is a microeconomic factor) but consumers as a whole are considered.

#) unemployment rate decreases as the inflation increases. There is an inverse relationship. Unemployment rate is a macroeconomic element.

Therefore, the model of inflation impact is a macroeconomic issue.