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Macroeconomics . An Introduction . Microeconomics and Macroeconomics. Microeconomics: Study of the behavior of economic units such and households and firms Macroeconomics: Study of economic aggregates such as national income and the overall price level . PPC Revisited .

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macroeconomics

Macroeconomics

An Introduction

microeconomics and macroeconomics
Microeconomics and Macroeconomics
  • Microeconomics: Study of the behavior of economic units such and households and firms
  • Macroeconomics: Study of economic aggregates such as national income and the overall price level
ppc revisited
PPC Revisited
  • Macroeconomic Objectives
  • Full employment
  • Stable Prices
  • Steady Growth
  • Achieving macroeconomic goals
  • in a market economy
  • The market’s self-correcting
  • mechanism
  • Imperfect and slow market
  • adjustments

Good a

F

G

U

H

Good B

0

business cycles
Business Cycles
  • The Great Depression: 1929
  • The Keynesian Solution
  • The Act 1946: The Federal government is to intervene in the economy to prevent declines in output and employment
recent macroeconomic experiences
Recent Macroeconomic Experiences
  • The 1950s: The Post-war recovery
  • The1960s: Continued growth with some inflation
  • The 1970s’ stagflation
  • Controlling inflation and supply side economics in the 1980s
  • Prosperity in 1990s (Low inflation and low unemployment)
  • Slow down in 2000-2001; mild recovery in the following years
macroeconomic concerns
Macroeconomic Concerns
  • Unemployment

The unemployment rate is often regarded as the key indicator of the health of the economy.

  • Inflation/deflation

Although high inflation (or sever deflation) has not been a common occurrence in the US some other countries have had long period of very high inflation.

  • Slow economic growth

Recessions are periods (lasting two consecutive quarters) during which aggregate output declines.

A prolonged deep recession is called “depression.”

macroeconomic policy tools
Macroeconomic Policy Tools
  • Fiscal policy
      • Taxation
      • Government expenditures
      • Trade policies
  • Monetary policy
      • Money and interest rates
      • Foreign exchange policies
  • Growth or supply-side policy
business cycle
Business Cycle

GDP: A measure of economic output

  • Nominal GDP
  • Real GDP
  • Potential (real) GDP
  • Business cycle: trough – expansion – peak – recession
business cycle9
Business Cycle

RGDP

Peak

Recession

Expansion

Trough

Time

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