chapter_5 - Chapter 5 Three streps of Macroeconomics I....

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Unformatted text preview: Chapter 5 Three streps of Macroeconomics I. Understand the primary components of measuring the aggregate economy. II.Develop models to understand how the economy works. III. Macro-economic Policy- Understand what the government can do (if anything) to reduce fluctuations in the economy and promote economic growth. Why cant we just study Microeconomics and apply it to the whole economy? (ie how does Macroeconomics differ from Macroeconomics) 1. The Whole is Greater than the Sum of its Parts- the combined effects of individual decisions can have very different results than what the individuals had intended. Example: The Paradox of Thrift 2. Government policy is much less controversial in Macroeconomics then in Microeconomics. What is the best way to measure economic prosperity? More complicated Circular Flow diagram 2 - Final goods : intended for the _______ user Intermediate goods: used as _____________ ______________in the production of other goods GDP only includes __________goods they already embody the value of the ___________ used in their production. Example: 3 Goods and services: Includes 4 Produced only includes________________________. 5 Within a Country- 6 in a given period of time. Say whether or not the following transactions would be counted in 2010 GDP. 1. McDonalds buys buns for its Big Macs....
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This note was uploaded on 12/26/2010 for the course ECO 181 taught by Professor Cherry during the Fall '07 term at SUNY Buffalo.

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chapter_5 - Chapter 5 Three streps of Macroeconomics I....

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