chapter 4 - 1 Chapter 4 What Macroeconomics Tries to...

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Unformatted text preview: 1 Chapter 4 What Macroeconomics Tries to Explain 2 Macroeconomic Goals Microeconomics Behavior of individual decision makers and individual markets Macroeconomics Broad outlines of the economy 1. Economic growth 2. Full employment 3. Stable prices 3 Economic Growth Increase in production of goods and services that occurs over long periods of time Most developed countries: Annual output of goods and services has risen over time, risen faster than population Economists monitor economic growth by keeping track of real GDP Real GDP Total quantity of goods and services produced in a country over a year Real GDP rises faster than the population, output per person rises, so does average standard of living. Real GDP of U.S. (1929-2006) Increased dramatically Population increase? Increased faster than population 4 Economic Growth Figure 1 U.S. Real Gross Domestic Product, 19292006 5 Economic Growth Although output has grown , the rate of growth has varied over the decades Over long periods of time, small differences in growth rates can cause huge differences in living standards Growth increases the size of the economic pie (does every citizen have a larger slice?) growth doesnt benefit everyone (why?) some people believe that in the long run everyone will benefit from growth others see a role for the government (how?) Macroeconomics helps us understand a number of issues surrounding economic growth....
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chapter 4 - 1 Chapter 4 What Macroeconomics Tries to...

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