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In: Economics

Macroeconomics

Is the effect of government regulations on auto emissions related to microeconomics or macroeconomics?

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Expert Solution

Despite the fact that the automobile manufacturing industry falls under microeconomics, the pollution that it causes from its emissions affects the air that people breathe. Hence, the government intervenes to regulate it thus making it related to macroeconomics.

Economics has two divisions. Microeconomics which deals with the study of how individuals, firms and households make decisions and how they interrelate in the market. Macroeconomics deals with the study of the economy-wide situation, which includes GDP, unemployment, inflation and economic growth rate.

The pollution created by the auto emissions affects the air people breathe. Hence the government's regulation of the emissions would be a macroeconomic case.

Joes answered 3 years ago
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