Economics slide 6 - - Introduction to Macroeconomics...

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Unformatted text preview: Introduction to Macroeconomics Macroeconomics Macroeconomics deals with the economy as a whole. It studies the behavior of economic aggregates such as aggregate income, consumption, investment, and the overall level of prices. Aggregate behavior refers to the behavior of all households and firms together. The Roots of Macroeconomics The Great Depression was a period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s. The Roots of Macroeconomics Classical economists applied microeconomic models, or market clearing models, to economy-wide problems. The failure of simple classical models to explain the prolonged existence of high unemployment during the Great Depression provided the impetus for the development of macroeconomics. Recent Macroeconomic History In 1936, John Maynard Keynes published The General Theory of Employment, Interest, and Money . Keynes believed governments could intervene in the economy and affect the level of output and employment. Fine-tuning was the phrase used by Walter Heller to refer to the governments role in regulating inflation and unemployment. Recent Macroeconomic History The use of Keynesian policy to fine-tune the economy in the 1960s, led to disillusionment in the 1970s and early 1980s. Stagflation occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation). Macroeconomic Concerns Three of the major concerns of macroeconomics are: Inflation Output growth Unemployment Inflation...
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This note was uploaded on 06/14/2011 for the course MACROECONO 100 taught by Professor Adell during the Spring '10 term at Dawson College.

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Economics slide 6 - - Introduction to Macroeconomics...

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