Principles of Economics- Mankiw (5th) 478

Principles of Economics- Mankiw (5th) 478 - 494 PA R T E I...

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494 PART EIGHT THE DATA OF MACROECONOMICS sales), or the imbalance of trade between the United States and the rest of the world (the trade deficit). All these statistics are macroeconomic. Rather than telling us about a particular household or firm, they tell us something about the entire economy. As you may recall from Chapter 2, economics is divided into two branches: microeconomics and macroeconomics. Microeconomics is the study of how indi- vidual households and firms make decisions and how they interact with one another in markets. Macroeconomics is the study of the economy as a whole. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets at once. Macroeconomists address diverse ques- tions: Why is average income high in some countries while it is low in others? Why do prices rise rapidly in some periods of time while they are more stable in other periods? Why do production and employment expand in some years and contract in others? What, if anything, can the government do to promote rapid growth in
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