0009 Lecture Notes - Lecture 1: Aggregate Supply, Aggregate Demand, Macroeconomics
Document Summary
Economics is the study of how society allocates limited resources to the production of goods and services to satisfy unlimited human wants. There are two main branches of economics: microeconomics and macroeconomics. Microeconomics deals with the analysis of individual parts of the economy. Macroeconomics deals with the analysis of the whole economy. It concerns factors determining aggregate variables such as aggregate demand, aggregate supply, national output, unemployment, inflation, the balance of payments, etc. As opposed to microeconomics which focuses on the individual parts of the economy, macroeconomics looks at the big picture of the economy. Economists often distinguish between positive economics and normative economics. It tells us what was, what is or what will be. Disagreement over positive economics can be settled by an appeal to facts. A decrease in personal income tax will lead to a rise in unemployment. ". In the above statement, both personal income tax and unemployment are measurable and hence the statement is verifiable.
