Note202_01 - Macroeconomics Theory and Policy...

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Macroeconomics Theory and Policy Masoud Anjomshoa 1 Masoud Anjomshoa 1 Macroeconomics Theory and Policy ECO202Y1Y Masoud Anjomshoa 2 Macroeconomics is concerned with the overall effects ( big picture ) of these choices that these economic agents make on the economy. What is Macroeconomics? . Macroeconomics is the study of the behavior of the aggregate economy, i.e. a large collection of economic agents, like aggregate consumption, aggregate output, aggregate investment, … Microeconomics is concerned with the choices of single economic agents such as households and firms, and so on.
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Macroeconomics Theory and Policy Masoud Anjomshoa 2 Masoud Anjomshoa 3 What is Macroeconomics? . Per capita output Masoud Anjomshoa 4 Macroeconomics: . - Keeping - Keeping - Keeping Objectives of Macroeconomics: - Aggregate output/income - Unemployment rate - Inflation rate Major Macroeconomics Variables: Î Keeping
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Macroeconomics Theory and Policy Masoud Anjomshoa 3 Masoud Anjomshoa 5 Great Depression: . - Depression started by crash of stock market in October 1929. By year1933, the worst year of the depression: - The stock market lost 80% of its value. - GDP fell by more than 33%. - Prices, including prices of agricultural crops, dropped between 40-60%. - Unemployment rate rose to 23.6%. - 10,000 banks, or 40% of all banks in 1929, failed. - $2 Billion bank deposits were lost. - Money supply shrank by 31%. - Export declined by more than 67%. Masoud Anjomshoa 6 Economy circular flow Firms Revenue Income Factor Payments Private Saving Goods Market Financial Market Factor Market Capital Flow Taxes Firms Households Government Foreigners Investors Budget Deficit Consumption Export-Import Government Spending Investment Borrowing Inventories
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Macroeconomics Theory and Policy Masoud Anjomshoa 4 Masoud Anjomshoa 7 Economy circular flow Firms Revenue Income Factor Payments Private Saving Goods Market Financial Market Factor Market Capital Flow Taxes Firms Households Government Foreigners Investors Budget Deficit Consumption Export-Import Government Spending Investment Borrowing Inventories Masoud Anjomshoa 8 Measuring Output: GDP (Gross Domestic Product) . The market value of all final goods and services produced within a country in a given period of time. At the price which the good is transacted, not the one it should be, or believed to be fair.
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Macroeconomics Theory and Policy Masoud Anjomshoa 5 Masoud Anjomshoa 9 Measuring Output: GDP (Gross Domestic Product) . The market value
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Note202_01 - Macroeconomics Theory and Policy...

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