Ch04_macro

Ch04_macro - Chapter 4 A First Look at Macroeconomics...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 4: A First Look at Macroeconomics Objectives: Describe the origins and issues of macroeconomics Describe the trends and fluctuations in economic growth and explain the benefits and costs of economic growth Describe the trends and fluctuations in unemployment and explain why unemployment is a problem Describe the trends and fluctuations in inflation and the value of the dollar and explain why inflation is a problem Describe the trends and fluctuations in surpluses, deficits, and debts and explain why they matter Identify the macroeconomic policy challenges and list the tools available for meeting them
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
What Will Your World Be Like? Will tomorrow’s world be more prosperous than today? Will jobs be plentiful? Will the cost of living be stable? Will the government’s and the nation’s deficit continue to increase? What macroeconomic policy tools does the government have to steer the course of the economy?
Background image of page 2
Origins and Issues of Macroeconomics Economists began to study economic growth, inflation, and international payments during the 1750s. Modern macroeconomics dates from the Great Depression , a decade (1929-1939) of high unemployment (25%) and stagnant production throughout the world economy. John Maynard Keynes book, The General Theory of Employment, Interest, and Money , began the subject. Although aware of long-term issues, Keynes focused on the short-term — on unemployment and lost production . He wanted to cure the immediate problem. “In the long run,” said Keynes, “we’re all dead.”
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Origins and Issues of Macroeconomics Short-Term Versus Long-Term Goals During the 1970s and 1980s (high inflation), macroeconomists became more concerned about the long-term —inflation and economic growth. Today, macroeconomics is a subject that studies long-term economic growth and inflation (Chapters 7 to 10) as well as short-term business fluctuations and unemployment (Chapters 11 to 13). We are still learning.
Background image of page 4
Economic Growth and Fluctuations Economic growth is the expansion of the economy’s production possibilities—an outward shifting PPF . We measure economic growth by the increase in real GDP. GDP, or Gross Domestic Product (Chapter 5), is the market value of all the final goods and services produced within a country in a given time period. Real GDP (Real Gross Domestic Product) is the market value of all the final goods and services produced within a country in a given time period measured in the prices of a single year (2000).
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Wage Index Year Salary Raise Inflation Real Income $ % % Index (Yr. 1 $) Index 1 $ 50,000 100 $ 50,000 100 $ 2,500 5% 3% 2 $ 52,500 103 $ 50,971 101.9 $ 2,625 5% 4% 3 $ 55,125 107.1 $ 51,461 102.9 $ 2,756 5% 5% 4 $ 57,881 112.5 $ 51,461 102.9 $ 2,894 5% 7% 5 $ 60,775 120.3 $ 50,499 101.0 $ 3,039 5% 8% 6 $ 63,814 130.0 $ 49,096 98.2 Over 5 years, the nominal salary grew 27.6%, while inflation was 30%.
Background image of page 6
Economic Growth and Fluctuations Economic Growth in the United States Figure 4.1 shows real GDP in the United States from
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 41

Ch04_macro - Chapter 4 A First Look at Macroeconomics...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online