Question

Why do economists pay more attention to national economies ( for example the U.S or Canadian economies ) than the state or provincial economies( such as California or Ontario)

Answer 1

National economic indicators are better indicators of the economic health of a country than the state or local economic indicators because state economies are concerned with their regions only. Also, the national economy concerns more people than any individual area that makes up the economy, it is relatively more important. This is because there are many factors that can affect local or state economies that are specific to that region only. These local and state economic fluctuations usually only affect those areas, and therefore are less important when looking at overall economic conditions on a macro level. They do not provide the perfect picture at the macro level to the economist. Further, country wide economies provide more insight to economists in determining trends and business cycle stages. The information at the state or local level is too small and localized to provide as much insight. Though state economies are also important and are the pillars of any central economy but wider picture is shown only by the national economies.

Each National Economy has its own rules of the game, that is, its own laws, regulations, customs, and conventions for conducting economic activity. U.S. gross domestic product provides a measure of the performance of the national economy and how it interacts with the rest of the world.