Microeconomics is the fundamentals of behavioral economics from individuals' and companies' perspective. Unlike Macroeconomics, Microeconomics does not smooth out inefficiencies and noise due to the difference between actual supply and demand and perceived supply and demand. I have provided an example of Microeconomic changes due to actual and perceived information about supply and demand in my video about the Price of Oil. I highly recommend watching it.
In the coming weeks, I will be discussing fundamentals of Microeconomics and then moving onto specific behavioral economic issues we face today.
While many political candidates think that they are arguing over macroeconomic issues, most are actually arguing about microeconomic issues. Macroeconomic issues deal with interest rates, money supply (amount of money that is printed), central banking system and fiscal policy (government spending). It's is last one, government spending, that is macro-, but these political candidates are usually looking for short terms effects. If they were serious about macroeconomic policies, they'd be asking questions like "Should we keep the central banking system?" and not "how much should we cut next year's budget?" Next year's budget has macroeconomic consequences but it can be offset by the central banking system. This is the reason why understanding which type of economics to understand the various political statements being said during this election year will be important in understanding what kind of country you want to live in and what kinds of policies politicians propose will get the results you want.
No comments:
Post a Comment