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Chapter 9 Macro

Chapter 9 Macro - Chapter 9 Introduction to Macroeconomics...

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Chapter 9 Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations 21. 1 Macroeconomic Goals The three major macroeconomic goals include: Maintaining employment of human resources at relatively high levels; Maintaining prices at a relatively stable level so that consumers and producers can make better decisions; Achieving a high rate of economic growth, meaning a growth in output per person over time. Three Major Macroeconomic Goals The term real gross domestic product (RGDP) is used to measure output or production. The term real is used to indicate that the output is adjusted for the general increase in prices over time. Gross domestic product (GDP) is defined as the total value of all final goods and services produced in a given period of time. In addition to primary goals, goals that are microeconomic in nature are also pursued. Quality of life. Fairness. Self-sufficiency in production of certain goods and services. Individuals within a society may differ considerably in how they evaluate the relative importance of certain issues, or even in whether they consider certain “problems” to really be problems after all. The Employment Act of 1946 and the Full Employment and Balanced Growth Act of 1978 (the Humphrey– Hawkins Act) commit the U.S. government to pursuing unemployment policies that are also consistent with price stability. It first acknowledged formally primary macroeconomic goals. The news of lower unemployment usually sends stock prices higher; and the news of higher unemployment usually sends stock prices lower. Politicians are also concerned about the unemployment figures because elections often hinge precariously on whether unemployment has been rising or falling. A loss of a job can mean financial insecurity and a great deal of anxiety. High rates of unemployment in a society can increase tensions and despair. Society loses some potential output of goods when some of its productive resources—human or nonhuman—remain idle, and potential consumption is reduced. Thus a loss in efficiency occurs when people willing to work and equipment able to produce remain idle. Other things being equal, relatively high rates of unemployment are viewed almost universally as undesirable.
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When discussing unemployment, economists and politicians refer to the unemployment rate. To calculate the unemployment rate, you must first understand another important concept—the labor force. It includes the number of people over the age of 16 who are available for employment. The civilian labor force figure excludes people in the armed services and those in prisons or mental hospitals. Other people regarded as outside the labor force include homemakers, retirees,
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Chapter 9 Macro - Chapter 9 Introduction to Macroeconomics...

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