1)What is the best way to describe macroeconomics? What does a production possibilities curve show?

2)Provide an example of a macroeconomic event that would affect firms.

1)Macroeconomics is a subfield of economics that centers of the behavior of the whole economy. This discipline is concerned with developments like the total level of employment, the price level, and the total production level in the national economy. Furthermore, macroeconomics examines how the world economy impacts the behavior of the national economy.

A production possibilities curve depicts the tradeoffs that face a country that is generating only two products. This curve shows the highest quantity of one product that can be generated for a given amount produced of the other.

2)

The answer to the given question is explained below:

• If the US Federal Reserve increases the interest rates, such monetary policy is called a contractionary policy as the firms would find it difficult to borrow loans from commercial banks owing to increased cost of capital.
• Hence, the firms would relatively make less investments in new projects and thus less employment will be created.
• On the contrary, if the US Federal Reserve decreases the interest rates, such monetary policy is called a expansionary policy as the firms would find it easy to borrow loans from commercial banks owing to decreased cost of capital.
• Hence, the firms would relatively make more investments in new projects and thus more employment will be created.