Suppose that the government has raised by $10 a per-carat tax rate it imposes on diamonds in an effort to influence production of this particular good by each of the firms that produce it and purchases by individual consumers. would we apply microeconomic or macroeconomic analysis to analyze this policy action?

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Business

Fisher Franco

11 April, 05:52

Suppose that the government has raised by $10 a per-carat tax rate it imposes on diamonds in an effort to influence production of this particular good by each of the firms that produce it and purchases by individual consumers. would we apply microeconomic or macroeconomic analysis to analyze this policy action?

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Grant Maddox · Answer 1

I think we should use macroeconomic analysis to analyze it.

Macroeconomic analysis is used to analyze the policies that affect the economy on nation-wide level.

The tax rate that imposed by the government will definitely affect the total Gross Domestic Product for diamonds and affect the nation's economic scale.