chap 5 notes

chap 5 notes - Macroeconomics Overview 1 Macroeconomics...

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Macroeconomics Overview 1. Macroeconomics – Study of economics from an aggregate level. a. Macroeconomics generally focuses on three main issues: i. Total Output (GDP) ii. Unemployment (Unemployment Rate) iii. Price Level (Inflation Rate) b. The “right” level of each of these economic indicators is a normative question (a “should” argument that is a value judgment rather than a scientific approach). In this course, we will examine these indicators from a positive approach, e.g. what causes fluctuations in these indicators, what is the relationship between each, etc. 2. Aggregate Demand a. Slope: Typically Negative Relationship between total price level and total output (see page 116) because of: i. Wealth Effect ii. Interest Rate Effect iii. Foreign-sector substitution b. AD = C + I + G +XM i. C – Consumption (+ relationship) [Largest Part of AD] ii. I – Investment (+) [Most Volatile Part of AD ] iii. G – Government Spending (+) iv. XM – Net Exports (+) 3.
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This note was uploaded on 03/19/2008 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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chap 5 notes - Macroeconomics Overview 1 Macroeconomics...

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