Worksheet 1 – What is Macroeconomics?
Unemployment, Inflation and Growth
Introduction to Macroeconomics
- Spring 2011
Due 2/5, Saturday, by 5pm.
Email to either
with your TA’s name in the subject line.
What is macroeconomics?
When did it become important in economics?
Macroeconomics is the operation and health of an entire economy. It is the branch of economics that
deals with large economic aggregates including GDP, total employment, overall price level, and how
these are determined. It became important in economics since World War II.
How did the Great Depression Affect the way we think about the economy and the role of
Today, how are we rethinking government’s role?
What do you think?
The Great Depression affected the way we think about the economy because during the Great
Depression, the stock market crashed, 9000 US banks failed, there was a 25% unemployment
rate in the US (about 12.5 million people unemployed out of a labor force of about 50 million),
and the overall GDP fell by about 25%. Due to the Great Depression, the US government
decided to play a bigger role in controlling and regulating the economy. The government decided
that it is their responsibility to promote maximum employment, production, and purchasing
power through key acts and developments including the FDIC (Federal Deposit Insurance
Corporation), Social Security, and the Employment Act. Today, we are rethinking government’s
role by debating the addition of more government regulations including healthcare reform, tax