Lecture Notes 4

Lecture Notes 4 - 1 1 Chapter 4 What Macroeconomics Tries...

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Unformatted text preview: 1 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, 1929–2006 2 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 doesn’t 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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This note was uploaded on 03/27/2008 for the course ECON 102 taught by Professor Singerman during the Spring '08 term at Iowa State.

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Lecture Notes 4 - 1 1 Chapter 4 What Macroeconomics Tries...

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