The chapters ahead are all based on the same idea: The behavior of the macroeconomic whole reflects millions of individual microeconomic decisions. And so if you want to understand the big picture, you’ll need to understand decisions that you—and countless people just like you—make every day.
We’ll start by analyzing how people make consumption and saving decisions. We’ll see that deciding whether to spend your money today or save it for the future is all about making trade-offs over time. Next, we’ll examine how managers make investment decisions that involve trading off a big upfront cost for an ongoing stream of future benefits. Along the way, we’ll share economic insights into how you can make better consumption, saving, and investment decisions in your own life.
We’ll then apply these ideas to the financial sector, where we’ll evaluate the different opportunities offered by stocks, bonds, and banks. We’ll assess whether to trust financial experts, whether you can beat the market, and whether your money is safe. Finally, we’ll turn to the international sector, where we’ll explore the opportunities offered by globalization, as we analyze the decisions you make about whether to invest abroad whether to buy or sell U.S. dollars, and whether to import or export goods.