A.P. Macroeconomics

         ... at Klein Oak High School

 

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"People respond to incentives; all the rest is commentary"
 
- Steven Landsburg, The Armchair Economist

Macroeconomics, as the name suggests, is the study of the big picture of the economy. It's the stuff of unemployment and inflation rates, the standard of living, of tax rates and interest rates, monetary policy, and payment balances.

Because it is all this and more, it is the subject of public discourse by politicians, commentators and citizens. That's not necessarily a good thing.

The first lesson of economics is scarcity:
There is never enough of anything to satisfy all those who want it.
The first lesson of politics is to disregard the first lesson of economics.

- Thomas Sowell, Stanford economist
 

The American economy is the eighth wonder of the world;
the ninth is the economic ignorance of the American people.

- Arthur Levitt, former chairman of the New York Stock Exchange

So even before our first lesson, dear students, let's keep in mind yet another economist's admonition: "It ain't [sic] what people don't know that does the most damage. It's that they know so danged much that just ain't [sic] so." (the late Frank Knight, University of Chicago)

Anyone who tells you that all will be set right by changing the incumbent political regime (or by keeping it another cycle), absent any other analysis, you may disregard. If anyone tells you that war is good for the economy, please run away. When a news commentator declares that a reduction in the balance of trade deficit is good news, again absent any further analysis, please disregard him.

With these cautions, students, let's get started. And let's remember Dr. Landsburg's dicta at the top of this page as we go.


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2002 by Gary Nelson. All rights reserved.