Not sure I understand it well either, but that never stopped me before :-D
I think the upper-left quadrant of “describes well / never happens” is the domain of toy theories and toy problems. Microeconomics likely landed there because it tends to go “Imagine a frictionless marketplace with two perfectly rational and omniscient agents...”
The lower-right quadrant of “describes badly / happens all the time” is the domain or reality economics. It’s a mess and nobody understands it well but yes, it happens all the time. Macroeconomics was probably placed there because, while it has its share of toy theories, it does concern itself with empirical studies of what actually happens in reality when interest rates go up or down, money supply fluctuates, FX rates are fixed or left to float, etc.
Not sure I understand it well either, but that never stopped me before :-D
I think the upper-left quadrant of “describes well / never happens” is the domain of toy theories and toy problems. Microeconomics likely landed there because it tends to go “Imagine a frictionless marketplace with two perfectly rational and omniscient agents...”
The lower-right quadrant of “describes badly / happens all the time” is the domain or reality economics. It’s a mess and nobody understands it well but yes, it happens all the time. Macroeconomics was probably placed there because, while it has its share of toy theories, it does concern itself with empirical studies of what actually happens in reality when interest rates go up or down, money supply fluctuates, FX rates are fixed or left to float, etc.