The study of economics is important to everyone. Financial decisions affect everyone in their day-to-day routines. Economics is the study of how society manages its scarce resources (Mankiw, 2012). Macroeconomics is the study of economy wide phenomena, including inflation, unemployment, Gross Domestic Product, and economic growth (Mankiw, 2012). Macroeconomics is important because, it is how all of us relate into markets and economies. Many news articles today are centered on the economy and current events. One of these articles lends itself to many economic principles and ideas. Even though there are many important topics not covered in the article, the article titled, "You Are What You Owe" in Time, encompassed many general economic principles as well as the many macroeconomics indices illustrated in the article.
The article titled “You Are What You Owe,” centers around the recent gridlock in Washington over the debt ceiling (Mallaby, 2011). The article explores what would have happened had the United States government not come to an agreement on the American debt ceiling. The article also relates the United States crisis to previous counties that have faced this crisis in the past (Mallaby, 2011). The article reports on the finance and economic conditions in 2011 in the United States during the debt crisis (Mallaby, 2011). The article also discusses the American credit and bond strength and government’s securities, as well as the United States federal debt (Mallaby, 2011). The Gross Domestic Product or GDP, for different countries is also discussed in this recent article (Mallaby, 2011). The United States foreign economic relationships are also explored in the article titled, “You Are What You Owe” (Mallaby, 2011). The United States’ national budget and the reforming of America’s budget were explored (Mallaby, 2011). Many important economic principles are also discussed in the article. Many of these economic Principles will be examined in this paper.
General Economic Principles
In the Article, “You Are What You Owe,” the first general economic Principle that was discussed in the article was the idea of markets. Markets are described as a group of buyers and sellers of a particular good or service in the text (Mankiw, 2012). The United States debt-ceiling crisis would have potentially wreaked havoc on many American markets. America would have paid a higher price to borrow, and that cost would have been passed on to the average American. This would have led to instability many of the United States’ markets. Many of today’s markets in the United States rely on borrowing money. If the Federal government had to pay higher to borrow money, this would cause its citizens to pay a higher price for money. For example, where some people were able to buy a one hundred thousand dollar home, at a higher rate of borrowing money they may not be able to afford the same home. This would affect...