This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Chapter 1 Introduction to Macroeconomics Learning Objectives I. Goals of Part I A) Introduce students to the main concepts in macroeconomics (Ch. 1) B) Introduce national income accounting and major economic magnitudes (Ch. 2) II. Goals of Chapter 1 A) Major macroeconomic issues—growth, business cycles, unemployment, inflation, the international economy, macroeconomic policy, aggregation (Sec. 1.1) B) What macroeconomists do—forecasting, analysis, research, data development (Sec. 1.2) C) Why macroeconomists disagree—classicals vs. Keynesians; the text’s approach (Sec. 1.3) III. Notes to Fourth Edition Users: This chapter is little changed; the data were updated and some examples from recent years were added, such as the tariffs on steel imports imposed in 2002 Teaching Notes I. What Macroeconomics Is About (Sec. 1.1) A) Longrun economic growth 1. Growth of output in United States over time 2. Sources of growth—population, average labor productivity growth This may be a good place to introduce students to the calculation of a growth rate, which is used throughout the textbook. You can write it first in general terms, as % ∆ X = [( X t +1 – X t )/ X t ] × 100% = [( X t +1 / X t ) – 1] × 100%. Then you might use an example with something you’re talking about, such as real GDP growth over the past year, or the inflation rate. Throughout the text, students may come across mathematical calculations that are unfamiliar to them. The Appendix to the textbook contains some helpful basic guidance to mathematical topics, including discussions of functions and graphs, slopes of functions, elasticities, functions of several variables, shifts of a curve, exponents, and growthrate formulas. B) Business cycles 1. Shortrun contractions and expansions in economic activity 2. Downward phase is called a recession 2 Abel/Bernanke • Macroeconomics, Fifth Edition C) Unemployment; U.S. experience Analytical Problem 1 asks students to think about average labor productivity and unemployment and their relationship to output. D) Inflation Analytical Problem 2 asks students to think about the welfare consequences of having a higher price level. 1. U.S. experience 2. Deflation (falling prices) 3. Inflation rate: the percentage increase in the level of prices You may wish to discuss how to calculate the inflation rate, which is just the growth rate of the price level. It can be expressed as π = [( P t +1 / P t ) – 1] × 100%. Numerical Problem 1 gives students practice calculating growth rates, including the growth rate of average labor productivity and the inflation rate. E) The international economy 1. Open vs. closed economies 2. Trade imbalances; the trade deficit or surplus F) Macroeconomic policy 1. Fiscal policy a. Effects of changes in federal budget b. U.S. experience c. Relation to trade deficit Numerical Problem 2 serves two purposes: (1) to get students to look at some real data on the economy and (2) to give them some idea how large are the trade deficit and government budget...
View
Full Document
 Spring '09
 William
 Economics, Macroeconomics, National Income, Keynesian economics, average labor productivity

Click to edit the document details