market efficiency and government intervention
Willingness to pay -- the maximum amount a consumer is willing to pay for a product
consumer surplus -- the difference between a consumer's willingness to pay for a product and the price that he or she pays for the product
willingness to accept -- the minimum amount a producer is willing to accept as payment for a product; equal to the marginal cost of production
producer surplus -- the difference between the price a producer receives for a product and the producers willingness to accept the product
total surplus -- the sum of consumer surplus and producer surplus
market failure -- a situation in which a market fails to be efficient because of external benefits, external costs, and perfect information, or in perfect competition
deadweight loss -- the decrease in the total surplus of the market
deadweight loss from taxation -- the difference between the total burden of a tax and the amount of revenue collected by the government
excess burden of a tax -- another name for deadweight loss
Government intervention in a market without externalities prevents consumers and producers from executing beneficial transactions, meaning that intervention reduces the total surplus of the market and causes and efficiency.
The total surplus of a market equals the sum of consumer surplus and producer surplus.
In a market that meets the four efficiency conditions (no external cost, no external benefits, perfect information, perfect competition), a market equilibrium maximizes the total surplus and is therefore efficient.
Price controls reduce the total surplus of a market because they prevent mutually beneficial transactions.
Quantity controls (like licensing and import restrictions) decreased consumer surplus and the total surplus of the market.
A tax on a good will be shifted forward onto consumers and backward onto input suppliers.
Because a tax causes people to change their behavior, the total burden of the tax exceeds the revenue generated by the tax.
Tuesday, June 20, 2006
Economics chapter 6
Budget line -- the line connecting all the combinations of two goods that exhaust the consumer's budget
budget set -- a set of points that includes all the combinations of goods that a consumer can afford, given the consumer's income and the prices of the goods
price ratio -- the ratio of the price of one good to the price of a second good; the market trade off
indifference curve -- a curve showing the different combinations of two goods that generate the same level of utility or satisfaction
utility -- the satisfaction experienced from consuming a product
marginal rate of substitution (MRS) -- the rate at which a consumer is willing to trade or substitute one good for another
indifference map -- a set of indifference curves, each with a different utility level
utility-maximizing rule -- picks the affordable combination that makes the marginal rate of substitution equal to the price ratio
equimarginal rule -- pick a combination of two things that equalize as the marginal benefit per dollar spent
The consumer's objective is to maximize utility, given their income in the prices of consumer goods.
To maximize utility, the consumer finds the point at which one of her indifference curves is tangent to her budget line.
At the utility- maximizing combination of two goods, the marginal rate of substitution (the consumers and trade off between the two goods) equals the price ratio (the market trade off).
According to the equimarginal rule, you should pick the mix of two things at which the marginal benefit per dollar spent on the first equals the marginal benefit per dollar spent on the second.
budget set -- a set of points that includes all the combinations of goods that a consumer can afford, given the consumer's income and the prices of the goods
price ratio -- the ratio of the price of one good to the price of a second good; the market trade off
indifference curve -- a curve showing the different combinations of two goods that generate the same level of utility or satisfaction
utility -- the satisfaction experienced from consuming a product
marginal rate of substitution (MRS) -- the rate at which a consumer is willing to trade or substitute one good for another
indifference map -- a set of indifference curves, each with a different utility level
utility-maximizing rule -- picks the affordable combination that makes the marginal rate of substitution equal to the price ratio
equimarginal rule -- pick a combination of two things that equalize as the marginal benefit per dollar spent
The consumer's objective is to maximize utility, given their income in the prices of consumer goods.
To maximize utility, the consumer finds the point at which one of her indifference curves is tangent to her budget line.
At the utility- maximizing combination of two goods, the marginal rate of substitution (the consumers and trade off between the two goods) equals the price ratio (the market trade off).
According to the equimarginal rule, you should pick the mix of two things at which the marginal benefit per dollar spent on the first equals the marginal benefit per dollar spent on the second.
Economics Chapter 5
Price elasticity of demand -- a measure of the responsiveness of the quantity demand to changes in price; computed by dividing the percentage change in quantity demand by the percentage change in price
elastic demand -- the price elasticity of demand is greater than 1
inelastic demand -- the price elasticity of demand is less than 1
unitary elastic -- the price elasticity of demand equals 1
perfectly inelastic demand -- the price elasticity of demand equals 0
perfectly elastic demand -- the price of elasticity of demand is infinite
midpoint method -- a method of computing a percentage change by dividing the change in the variable by the average value of the variable, or the midpoint between the old value in the new one
income elasticity of demand -- a measure of the responsiveness of the quantity demanded to changes in consumer income; computed by dividing the percentage change in the quantity demanded by the percentage change in income
Cross elasticity of demand -- a measure of the responsiveness of the quantity demanded to changes in the price of a related good; computed by dividing the percentage change in the quantity demanded of one good (X) by the percentage change in the price of another good (Y)
Price elasticity of supply -- a measure of the responsiveness of the quantity supplied to changes in price; computed by dividing the percentage change in quantity supplied by the percentage change in price
perfectly inelastic supply -- the price elasticity of supply equals 0
perfectly elastic supply -- the price elasticity of supply is infinite
Price change formula -- a formula that shows the percentage change in equilibrium price resulting from a change in demand or supply, given values for the price elasticity of supply and the price elasticity of demand
The law of demand tells us that an increase in the price of a product will decrease the quantity demanded, ceteris paribus. If we know the price elasticity of demand that good, we can determine just how much less will be sold at the higher price. Similarly, if we know the price elasticity of supply for product, we can determine just how much more of it will be supplied at a higher price.
The price elasticity of demand -- defined as the percentage change in quantity demanded divided by the percentage change in price -- measures the responsiveness of consumers to changes in price.
Demand is relatively elastic if there are good substitutes.
If demand is elastic, there is a negative relationship between price and total revenue. If demand is inelastic, there is a positive relationship between the price and total revenue.
The price elasticity of supply -- defined as the percentage change in quantity supplied divided by the percentage change in price -- measures the responsiveness of producers to changes in price.
If we know the elasticity is of supply and demand, we can predict the percentage change in price resulting from a change in demand or supply.
elastic demand -- the price elasticity of demand is greater than 1
inelastic demand -- the price elasticity of demand is less than 1
unitary elastic -- the price elasticity of demand equals 1
perfectly inelastic demand -- the price elasticity of demand equals 0
perfectly elastic demand -- the price of elasticity of demand is infinite
midpoint method -- a method of computing a percentage change by dividing the change in the variable by the average value of the variable, or the midpoint between the old value in the new one
income elasticity of demand -- a measure of the responsiveness of the quantity demanded to changes in consumer income; computed by dividing the percentage change in the quantity demanded by the percentage change in income
Cross elasticity of demand -- a measure of the responsiveness of the quantity demanded to changes in the price of a related good; computed by dividing the percentage change in the quantity demanded of one good (X) by the percentage change in the price of another good (Y)
Price elasticity of supply -- a measure of the responsiveness of the quantity supplied to changes in price; computed by dividing the percentage change in quantity supplied by the percentage change in price
perfectly inelastic supply -- the price elasticity of supply equals 0
perfectly elastic supply -- the price elasticity of supply is infinite
Price change formula -- a formula that shows the percentage change in equilibrium price resulting from a change in demand or supply, given values for the price elasticity of supply and the price elasticity of demand
The law of demand tells us that an increase in the price of a product will decrease the quantity demanded, ceteris paribus. If we know the price elasticity of demand that good, we can determine just how much less will be sold at the higher price. Similarly, if we know the price elasticity of supply for product, we can determine just how much more of it will be supplied at a higher price.
The price elasticity of demand -- defined as the percentage change in quantity demanded divided by the percentage change in price -- measures the responsiveness of consumers to changes in price.
Demand is relatively elastic if there are good substitutes.
If demand is elastic, there is a negative relationship between price and total revenue. If demand is inelastic, there is a positive relationship between the price and total revenue.
The price elasticity of supply -- defined as the percentage change in quantity supplied divided by the percentage change in price -- measures the responsiveness of producers to changes in price.
If we know the elasticity is of supply and demand, we can predict the percentage change in price resulting from a change in demand or supply.
Sunday, June 18, 2006
economics first section overview
Economics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.
There are many reasons to study economics, including
(a) to learn a way of thinking,
(b) to understand society,
(c) to understand global affairs, and
(d) to be an informed voter.
Economics attempts to understand behavior and the operation of economies, without making judgments about whether the outcomes are good or bad. It also looks at the results of economic behavior, and asks whether they are good or bad and whether they can be improved.
The Economic Problem: Scarcity and Choice
Every society has some system or mechanism for transforming into useful form what nature and previous generations have provided. Economics is the study of that process and its outcomes.
All societies must answer three basic questions:
What will be produced?
How will it be produced?
Who will get what is produced?
These three questions make up the economic problem.
Using resources to produce one good or service implies not using them to produce something else, because resources are scarce relative to human wants in all societies. This concept of opportunity cost is central to an understanding of economics.
Economic growth occurs when society produces more, either by acquiring more resources or by learning to produce more with existing resources. Improved productivity may come from additional capital, or from the discovery and application of new, more efficient techniques of production.
In some modern societies, government plays a significant role in answering the three basic questions. In pure command economies, a central authority directly or indirectly sets output targets, incomes, and prices. All economies are mixed. Individual enterprise, independent choice, and relatively free markets exist in centrally planned economies; and there is significant government involvement in market economies such as that of the U.S.
Demand, Supply, and Market Equilibrium
Households and firms interact in two basic kinds of markets: product or output markets and input or factor markets. Goods and services intended for use by households are exchanged in output markets. In output markets, competing firms supply and competing households demand. In input markets, competing firms demand and competing households supply.
Ultimately, firms determine the quantities and character of outputs produced, the types and quantities of inputs demanded, and the technologies used in production. Households determine the types and quantities of products demanded and the types and quantities of inputs supplied.
Market demand is simply the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service. It is the sum of all the individual quantities demanded at each price.
Quantity supplied by a firm depends on
(1) the price of the good or service,
(2) the cost of producing the product, which includes the prices of required inputs and the technologies that can be used to produce the product, and
(3) the prices of related products.
Market supply is the sum of all that is supplied each period by all producers of a single product. It is the sum of all the individual quantities supplied at each price.
Excess demand (or a shortage) exists and the price tends to rise when quantity demanded exceeds quantity supplied at the current price. If prices in a market rise, then quantity demanded falls and quantity supplied rises until equilibrium is reached, at which point quantity supplied and quantity demanded are equal. At equilibrium, there is no further tendency for price to change.
Excess supply (or a surplus) exists and the price tends to fall when quantity supplied exceeds quantity demanded at the current price. Quantity supplied decreases and quantity demanded increases when price falls until an equilibrium price is reached, at which point quantity supplied and quantity demanded are equal.
There are many reasons to study economics, including
(a) to learn a way of thinking,
(b) to understand society,
(c) to understand global affairs, and
(d) to be an informed voter.
Economics attempts to understand behavior and the operation of economies, without making judgments about whether the outcomes are good or bad. It also looks at the results of economic behavior, and asks whether they are good or bad and whether they can be improved.
The Economic Problem: Scarcity and Choice
Every society has some system or mechanism for transforming into useful form what nature and previous generations have provided. Economics is the study of that process and its outcomes.
All societies must answer three basic questions:
What will be produced?
How will it be produced?
Who will get what is produced?
These three questions make up the economic problem.
Using resources to produce one good or service implies not using them to produce something else, because resources are scarce relative to human wants in all societies. This concept of opportunity cost is central to an understanding of economics.
Economic growth occurs when society produces more, either by acquiring more resources or by learning to produce more with existing resources. Improved productivity may come from additional capital, or from the discovery and application of new, more efficient techniques of production.
In some modern societies, government plays a significant role in answering the three basic questions. In pure command economies, a central authority directly or indirectly sets output targets, incomes, and prices. All economies are mixed. Individual enterprise, independent choice, and relatively free markets exist in centrally planned economies; and there is significant government involvement in market economies such as that of the U.S.
Demand, Supply, and Market Equilibrium
Households and firms interact in two basic kinds of markets: product or output markets and input or factor markets. Goods and services intended for use by households are exchanged in output markets. In output markets, competing firms supply and competing households demand. In input markets, competing firms demand and competing households supply.
Ultimately, firms determine the quantities and character of outputs produced, the types and quantities of inputs demanded, and the technologies used in production. Households determine the types and quantities of products demanded and the types and quantities of inputs supplied.
Market demand is simply the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service. It is the sum of all the individual quantities demanded at each price.
Quantity supplied by a firm depends on
(1) the price of the good or service,
(2) the cost of producing the product, which includes the prices of required inputs and the technologies that can be used to produce the product, and
(3) the prices of related products.
Market supply is the sum of all that is supplied each period by all producers of a single product. It is the sum of all the individual quantities supplied at each price.
Excess demand (or a shortage) exists and the price tends to rise when quantity demanded exceeds quantity supplied at the current price. If prices in a market rise, then quantity demanded falls and quantity supplied rises until equilibrium is reached, at which point quantity supplied and quantity demanded are equal. At equilibrium, there is no further tendency for price to change.
Excess supply (or a surplus) exists and the price tends to fall when quantity supplied exceeds quantity demanded at the current price. Quantity supplied decreases and quantity demanded increases when price falls until an equilibrium price is reached, at which point quantity supplied and quantity demanded are equal.
Tuesday, June 06, 2006
economics ch. 4
Perfectly competitive market -- a market with a very large number of firms, each of which produces the same standardized product and amount so small that no individual firm can affect the market price
quantity demanded -- the amount of a product consumers are willing to buy
demand schedule -- a table of numbers that shows the relationship between price and quantity demanded, ceteris paribus
individual demand curve -- a curve that shows the relationship between price and quantity demanded by an individual consumer
Law of demand -- the higher the price, the smaller the quantity demanded
change in quantity demanded -- a change in the quantity consumers are willing to buy when the price changes; represented graphically by movement along the demand curve
substitution effect -- the change in consumption resulting from a change in the price of one good relative to the price of another good
income effect -- the change in consumption resulting from a change in purchasing power caused by a price change
market demand curve -- a curve showing the relationship between price and quantity demanded
quantity supplied -- the amount of a product firms are willing to sell
supply schedule -- a table of numbers that shows the relationship between price and quantity supplied
individual supply curve -- a curve showing the relationship between price and quantity supplied by a single firm
change in quantity supplied -- a change in the quantity firms are willing to sell when the price changes; represented graphically by movement along the supply curve
market supply curve -- a curve showing the relationship between price and quantity supplied
market equilibrium -- a situation in which the quantity of a product demanded equals the quantity supplied, so there is no pressure to change the price
excess demand -- a situation in which, at the prevailing price, consumers are willing to buy more than producers are willing to sell
excess supply -- a situation in which, at the prevailing price, producers are willing to sell more than the consumers are willing to buy
change in demand -- a change in the amount of a good demanded resulting from a change in something other than the price of the good; represented graphically by a shift on the demand curve
normal good -- a good for which an increase in income increases demand
inferior good -- a good for which an increase in income decreases demand
substitutes -- to goods that are related in such a way that an increase in the price of one good increases the demand for the other good
complements -- to goods related in such a way that a decrease in the price of one good increases the demand for the other good
change in supply -- a change in the amount of a good supplied resulting from a change in something other than the price of the good summer: represented graphically by shift on the supply curve
To drawl a demand curve, he must be certain that the other variables that affect demand:
To drawl in market supply curve, we must be certain the other variables that affect supply:
Equilibrium and a market is shown by the intersection of the demand curve and the supply curve. When a market reaches equilibrium, there is no pressure to change the price.
A change in demand changes price and quantity in the same direction: an increase in demand increases the equilibrium price and quantity; a decrease in demand decreases the equilibrium price and quantity.
A change in supplied changes price and quantity in opposite directions: an increase in the supply decreases price and increases quantity; a decrease in supply increases price and decreases quantity.
quantity demanded -- the amount of a product consumers are willing to buy
demand schedule -- a table of numbers that shows the relationship between price and quantity demanded, ceteris paribus
individual demand curve -- a curve that shows the relationship between price and quantity demanded by an individual consumer
Law of demand -- the higher the price, the smaller the quantity demanded
change in quantity demanded -- a change in the quantity consumers are willing to buy when the price changes; represented graphically by movement along the demand curve
substitution effect -- the change in consumption resulting from a change in the price of one good relative to the price of another good
income effect -- the change in consumption resulting from a change in purchasing power caused by a price change
market demand curve -- a curve showing the relationship between price and quantity demanded
quantity supplied -- the amount of a product firms are willing to sell
supply schedule -- a table of numbers that shows the relationship between price and quantity supplied
individual supply curve -- a curve showing the relationship between price and quantity supplied by a single firm
change in quantity supplied -- a change in the quantity firms are willing to sell when the price changes; represented graphically by movement along the supply curve
market supply curve -- a curve showing the relationship between price and quantity supplied
market equilibrium -- a situation in which the quantity of a product demanded equals the quantity supplied, so there is no pressure to change the price
excess demand -- a situation in which, at the prevailing price, consumers are willing to buy more than producers are willing to sell
excess supply -- a situation in which, at the prevailing price, producers are willing to sell more than the consumers are willing to buy
change in demand -- a change in the amount of a good demanded resulting from a change in something other than the price of the good; represented graphically by a shift on the demand curve
normal good -- a good for which an increase in income increases demand
inferior good -- a good for which an increase in income decreases demand
substitutes -- to goods that are related in such a way that an increase in the price of one good increases the demand for the other good
complements -- to goods related in such a way that a decrease in the price of one good increases the demand for the other good
change in supply -- a change in the amount of a good supplied resulting from a change in something other than the price of the good summer: represented graphically by shift on the supply curve
To drawl a demand curve, he must be certain that the other variables that affect demand:
- consumer income
- the prices of related goods
- tastes
- consumers price expectations
- number of consumers
To drawl in market supply curve, we must be certain the other variables that affect supply:
- input costs
- technology
- the number of producers
- their price expectations
- taxes
- subsidies
Equilibrium and a market is shown by the intersection of the demand curve and the supply curve. When a market reaches equilibrium, there is no pressure to change the price.
A change in demand changes price and quantity in the same direction: an increase in demand increases the equilibrium price and quantity; a decrease in demand decreases the equilibrium price and quantity.
A change in supplied changes price and quantity in opposite directions: an increase in the supply decreases price and increases quantity; a decrease in supply increases price and decreases quantity.
economics ch. 3
Chapter 3
exchange and markets
Markets exist to facilitate exchange between people. The alternative to exchange is to be self-sufficient, with each of us producing everything we need for ourselves. Rather than going it alone, most of us specialize by producing one or two products for others and exchanging the money we earned for the products we want to consume.
Comparative advantage -- the ability of one person or nation to produce a good at a lower opportunity cost another person or nation
consumption possibilities curve -- a curve showing the combinations of two goods that can be consumed when a nation specializes in the production of one good and trades with another nation
absolute advantage -- the ability of one person or nation to produce a good at a lower absolute cost that another person or nation
market economy -- an economy in which people exchange things, trading what they have for what they want
centrally planned economy -- an economy in which a government bureaucracy decide how much of each good to produce, how to produce the goods, and who gets them
It is sensible for person to produce the product for which he or she has a comparative advantage, that is, a lower opportunity cost than another person.
Specialization increases productivity through the division of labor, a result of the benefits of repetition, continuity, and innovation.
A system of international specialization and trade is sensible because nations have different opportunity costs of producing goods, giving rise to comparative advantages.
Under a market system, self interested people, guided by prices, make the decisions about what products to produce, how to produce them, and who gets them.
Government roles in a market economy include establishing the rules for exchange, reducing economic uncertainty, and responding to market failures.
exchange and markets
Markets exist to facilitate exchange between people. The alternative to exchange is to be self-sufficient, with each of us producing everything we need for ourselves. Rather than going it alone, most of us specialize by producing one or two products for others and exchanging the money we earned for the products we want to consume.
Comparative advantage -- the ability of one person or nation to produce a good at a lower opportunity cost another person or nation
consumption possibilities curve -- a curve showing the combinations of two goods that can be consumed when a nation specializes in the production of one good and trades with another nation
absolute advantage -- the ability of one person or nation to produce a good at a lower absolute cost that another person or nation
market economy -- an economy in which people exchange things, trading what they have for what they want
centrally planned economy -- an economy in which a government bureaucracy decide how much of each good to produce, how to produce the goods, and who gets them
It is sensible for person to produce the product for which he or she has a comparative advantage, that is, a lower opportunity cost than another person.
Specialization increases productivity through the division of labor, a result of the benefits of repetition, continuity, and innovation.
A system of international specialization and trade is sensible because nations have different opportunity costs of producing goods, giving rise to comparative advantages.
Under a market system, self interested people, guided by prices, make the decisions about what products to produce, how to produce them, and who gets them.
Government roles in a market economy include establishing the rules for exchange, reducing economic uncertainty, and responding to market failures.
Economics CH 2
Chapter 2
Key principles of economics
Opportunity cost -- what you sacrificed to get something
factors of production -- the input used to produce goods and services
production possibilities curve -- a curve that shows the possible combinations of products that an economy can produce, given that it's productive resources are fully employed and efficiently used
marginal benefit -- the extra benefit resulting from a small increase in some activity
marginal cost -- the additional costs resulting from a small increase in some activity
market -- an arrangement that allows people to exchange things
nominal value -- the face value of an amount of money
real value -- the value of an amount of money in terms of what it can buy
There are five key principles of economics, the simple, self evident truths that most people readily accept.
Key principles of economics
Opportunity cost -- what you sacrificed to get something
factors of production -- the input used to produce goods and services
production possibilities curve -- a curve that shows the possible combinations of products that an economy can produce, given that it's productive resources are fully employed and efficiently used
marginal benefit -- the extra benefit resulting from a small increase in some activity
marginal cost -- the additional costs resulting from a small increase in some activity
market -- an arrangement that allows people to exchange things
nominal value -- the face value of an amount of money
real value -- the value of an amount of money in terms of what it can buy
There are five key principles of economics, the simple, self evident truths that most people readily accept.
- Principal of opportunity cost -- the opportunity cost of something is what you sacrificed to get it
- marginal principal -- increase the level of an activity if it's marginal benefit exceeds its marginal cost; reduce the level of its marginal cost exceeds its marginal benefit. If possible, pick the level at which the marginal benefit equals the marginal cost
- principal of voluntary exchange -- a voluntary exchange between two people that makes both people better off
- principal of diminishing returns -- suppose that output is produced with two or more inputs and that we increase one input while holding the other inputs fixed. Beyond some point, called the point of diminishing returns, output will increase at a decreasing right
- real-nominal principal -- what matters to people is the real value of money or income, its purchasing power, not the face value of money or income
Economics CH 1
Economics -- the study of the choices that can be made when there is scarcity
scarcity -- a situation in which resources are limited in quantity and can be used in different ways
positive economics -- analysis that answers the questions, "what is?" Or "what will be?"
normative economics -- analysis that answers the question "what ought to be?"
variable -- a measure of something that can take on different values
ceteris paribus -- the Latin expression meaning other variables being held fixed
marginal change -- a small, one unit change in value
microeconomics -- the study of the choices made by households, firms, and government and of how these choices affect the markets for goods and services
macroeconomics -- the study of the nation's economy as a whole
Economics is about making choices when the options are limited. We use economic analysis to understand the consequences of our choices, as individuals, organizations, and society as a whole.
Positive analysis answers the questions "what is?" Or "what will be?"
Normative analysis answers the question "what ought to be?"
To think like an economist, we:
Rational people respond to incentives.
We use microeconomics to understand how markets work, make personal and managerial decisions, and evaluate the merits of public policies.
We use macroeconomics to understand why an economy grows, understand economic fluctuations, and make informed business decisions.
scarcity -- a situation in which resources are limited in quantity and can be used in different ways
positive economics -- analysis that answers the questions, "what is?" Or "what will be?"
normative economics -- analysis that answers the question "what ought to be?"
variable -- a measure of something that can take on different values
ceteris paribus -- the Latin expression meaning other variables being held fixed
marginal change -- a small, one unit change in value
microeconomics -- the study of the choices made by households, firms, and government and of how these choices affect the markets for goods and services
macroeconomics -- the study of the nation's economy as a whole
Economics is about making choices when the options are limited. We use economic analysis to understand the consequences of our choices, as individuals, organizations, and society as a whole.
Positive analysis answers the questions "what is?" Or "what will be?"
Normative analysis answers the question "what ought to be?"
To think like an economist, we:
- use assumptions to simplify
- use the notion of ceteris paribus to focus on the relationship between two variables
- think in marginal terms
Rational people respond to incentives.
We use microeconomics to understand how markets work, make personal and managerial decisions, and evaluate the merits of public policies.
We use macroeconomics to understand why an economy grows, understand economic fluctuations, and make informed business decisions.
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