Vocabulary for the text

equilibrium n Collocations - equilibrium national output - to bring to equilibrium	-	balance
externality n	-	appearance , exterior
side effect adj	-	1) collateral, indirect influence; 2) nonoperating result
aggregate adj Collocations - aggregate production - aggregate consumption	-	collected, whole, total
tax n Collocations - heavy tax - tax-free - income/profits tax - tax evasion - tax assessment	-	a governmental assessment upon property value, transactions (transfers and sales), licenses granting a right, and income
output n, v Collocations - annual output - average output - gross output - industrial output - national output	-	1) production , product; 2) power (n) 2) to produce
rate n Collocations - interest rates - discount rate - inflation rate - at the rate	-	degree, extent, grade
upswing n, v	-	1) improvement (n); 2) to improve (v)
downturn n	-	1) economic decline; 2) decrease, decline
monetary adj Collocations - monetary policy - monetary reserves -International Monetary Fund		1) connected with crediting and cash resources; 2) currency, exchange
fiscal adj Collocations fiscal policy fiscal year		financial
determine v	-	1) to decide, to resolve; 2) to ordain; 3) to regulate
household adj, n	-	1) family, domestic (adj); 2) farm, agricultural land (n)
explicitly adv	-	1) definitely; 2) in detail
figure out v	-	1) to calculate, to compute; 2) to understand; 3) to solve
improve v	-	1) to amend, to make better; 2) to develop, to perfect

Microeconomics versus macroeconomics

According to comedian P.J. O’Rourke, “microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or, to be more technical, microeconomics is about money you don’t have, and macroeconomics is about money the government is out of.” This is, probably, closer to the truth than economists would like, but let’s examine the distinction in more detail.

Microeconomics

Those, who have studied Latin, know that the prefix “micro-“ means “small,” so it shouldn’t be surprising that microeconomics is the study of small economic units. The field of microeconomics is concerned with things like:

• Consumer decision making and utility maximization

• Firm production and profit maximization

• Individual market equilibrium

• Effects of government regulation on individual markets

• Externalities and other market side effects

Macroeconomics

Macroeconomics can be thought of as the “big picture” version of economics. Rather than analyzing individual markets, macroeconomics focuses on aggregate production and consumption in an economy. Some topics that macroeconomists study are:

• The effects of general taxes such as income and sales taxes on output and prices

• The causes of economic upswings and downturns

• The effects of monetary and fiscal policy on economic health

• How interest rates are determined

• Why some economies grow faster than others

The Relationship Between Microeconomics and Macroeconomics

There is an obvious relationship between microeconomics and macroeconomics in that aggregate production and consumption levels are the result of choices made by individual households and firms, and some macroeconomic models explicitly make this connection.

Most of the economic topics covered on television and in newspapers are of the macroeconomic variety, but it’s important to remember that economics is about more than just trying to figure out when the economy is going to improve and what the Fed is doing with interest rates.

COMPREHENSION

 Exercise 2. Give extensive answers for the following questions:

1. What are “specifically” and ”generally” mean in P.J. O’Rourke saying: “microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally….”?

2. Speaking of microeconomics, what are the possible “externalities and other market side effects”?

3. What aspects of economics can we enjoy on TV and when reading printed versions?

 Exercise 3. Which of these statements agree with the text? Write 'agreed' or 'disagreed' in your notebook.

1. Microeconomics is the study of small economic units.

2. Macroeconomics can be thought of as the “big picture” version of economics.

3. Macroeconomics focuses on analyzing individual markets.

4. Macroeconomics studies the economies of nations.

5. Mass media project only macroeconomics variety.