CHAPTER 2

Economics and Decision Making

Why Study Economics

Economic principles undergird the decisions and strategies used by the largest international corporations and the smallest home businesses alike. Economic principles even help explain many of the mundane decisions we make in our lives. It’s not just financial decisions. Economic principles apply to the way we use our time and the way we make decisions. It’s all about trade-offs.

Economics has two primary branches. Macroeconomics studies broad economic impacts that affect global trade, government actions, and markets, including stock markets. Macroeconomic forces impact organizations and individuals as economies expand and contract. This is the branch most people think of when discussing ...

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