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In microeconomics consumer demand for mortgages when plotted against the price of a mortgage, interest rates, slopes negatively (left down to the right), implying consumers will demand fewer mortgages at higher interest rates then at lower rates. However, in macroeconomics mortgage demand when plotted against national income assumes a positive slope (left up to the right) implying mortgages and nartional income vary directly. This is because different independent or explanatory variables come into play at the micro and macro levels. National income, a macro variable, may enter the macro analysis, but not the micro analysis. While the micro and macro worlds are different, they are related or are interdependent as we shall see.
Macroeconomics and microeconomics allow different explanatory variables to influence demand. Bad mortgage lending practices at the individual bank or micro level may have a macro impact of rising unemployment.
It then follows that policies used to treat bad micro mortgage lending practices, will not be the same policies used to treat macro rising national unemployment resulting from the bad micro behavior. These policies may range from increased micro banking regulations to macro corporate capital gain tax cuts.
Question: Consider micro (firm level) and macro (national level) home mortgage foreclosures. Use the discussion and observations above, explain the micro and macro issues of mortgage foreclosures i.e. micro mortgage lending issues impacting the banking industry and the national or macro economy.
I tried looking in my text book for help but all it has is two paragraphs about micro and macro.. I read it 4 times and I'm not getting anything out of it.
Macroeconomics and microeconomics allow different explanatory variables to influence demand. Bad mortgage lending practices at the individual bank or micro level may have a macro impact of rising unemployment.
It then follows that policies used to treat bad micro mortgage lending practices, will not be the same policies used to treat macro rising national unemployment resulting from the bad micro behavior. These policies may range from increased micro banking regulations to macro corporate capital gain tax cuts.
Question: Consider micro (firm level) and macro (national level) home mortgage foreclosures. Use the discussion and observations above, explain the micro and macro issues of mortgage foreclosures i.e. micro mortgage lending issues impacting the banking industry and the national or macro economy.
I tried looking in my text book for help but all it has is two paragraphs about micro and macro.. I read it 4 times and I'm not getting anything out of it.