Notes For Macro - Macro-mostly ignored until great...

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Macro -mostly ignored until great depression Keynes Since early 80's, macro redifined Growth -represented by increase in PPF -When red GDP Increase expansion -When red GDP decreases, recession -potential GDP=value of real GDP, When labor, land, capital, and entrepreneurship, are fully employed -when real GDP > pot GDP, economy overworked -when real GDP< pot GDP, producing inefficiently (inside PPF) -when real GDP hugs pot GDP -during last 10 yrs -us about 20% of world economy -we grow 1 percentage point faster than Western Europe (3% to 2%) -us growing slower than developing Asia (3% to 9%) Unemployment -143 million jobs in US in 2006 Unemployment Rate: # of people looking for jobs/labor force (Ignores people who have given up) Usually During expansion, unemployment decreases During recession, unemployment increases Inflation -over time money loses value, due to inflation -inflation rate: percentage (annual) increase in the price level Deficits 1) Budget deficit -when govt spending<taxes, surplus -when govt spending>taxes, deficit
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