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Unformatted text preview: Economists strength is positive analysis Microeconomics (studying the behavior of the littlest units that are making the decisions: mostly households and business firms) vs. Macroeconomics (study of the overall economy wide aggregates. Overall rate of employment of workers or unemployment, or the overall rate of inflation, or overall rate of economic growth) Macro must rest on a micro foundation. Micro deals with important topics effects of taxes + tariffs, effects of education on earnings, economics of pollution, policies toward big business Analytical perspective: difficult or impossible to do controlled laboratory experiments. Thought experiments > data Often invoke an assumption called ceteris paribus or all else equal...
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- Fall '07