mankiw7e-chap01 - Intermediate Macroeconomics Fall 2010...

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1 CHAPTER 1 The Science of Macroeconomics Intermediate Macroeconomics Fall 2010 Chen Minghua
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2 CHAPTER 1 The Science of Macroeconomics In  this  chapter, you will learn: about the issues macroeconomists study the tools macroeconomists use some important concepts in macroeconomic analysis Chapter 1: The Science of Macroeconomics
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3 CHAPTER 1 The Science of Macroeconomics What is macroeconomics? What causes recessions? What is “government stimulus” and why might it help? How can problems in the housing market spread to the rest of the economy? What is the government budget deficit? How does it affect workers, consumers, businesses, and taxpayers? Macroeconomics , the study of the economy as a whole, addresses many topical issues, e.g. :
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4 CHAPTER 1 The Science of Macroeconomics What is macroeconomics? Why does the cost of living keep rising? Why are so many countries poor? What policies might help them grow out of poverty? What is the trade deficit? How does it affect the country’s well-being? Macroeconomics , the study of the economy as a whole, addresses many topical issues, e.g. :
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U.S. Real GDP per capita  (2000 dollars) long-run upward trend… Great Depression World War II First oil price shock Second oil price shock 9/11/2001
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U.S. Inflation Rate (% per year)
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U.S. Unemployment Rate (% of labor force)
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Social problems like homelessness, domestic violence, crime, and poverty are linked to the economy. For example… Why learn macroeconomics? 1. The macroeconomy affects society’s well-being. percent of labor force crimes per 100,000 population U.S. Unemployment and Property Crime Rates Unemployment (left scale) Property crimes (right scale)
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Why learn macroeconomics? 2. The macroeconomy affects your well-being. -3 -2 -1 0 1 2 3 4 5 1965 1970 1975 1980 1985 1990 1995 2000 2005 -7 -5 -3 -1 1 3 5 unemployment rate inflation-adjusted mean wage (right scale) change from 12 mos earlier percent change from 12 mos earlier In most years, wage growth falls when unemployment is rising.
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Why learn macroeconomics?
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This note was uploaded on 06/12/2011 for the course ECON 101 taught by Professor Dee during the Spring '10 term at Andhra University.

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mankiw7e-chap01 - Intermediate Macroeconomics Fall 2010...

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