Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 2 - Part I - Thinking Like an Economist - Questions for Review: 8

Answer

Economics is divided into two fields: microeconomics and macroeconomics.

Work Step by Step

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. For example, we can use microeconomics to study the effects of rent control on the housing market. Macroeconomics is the study of economy-wide phenomena, such as the effects of borrowing by the federal government or how an economy’s unemployment rate changes over time. These two subfields are closely related, but they address different questions and rely own their own set of models.
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