sam44222_ch04_1_

sam44222_ch04_1_ - Confirming Pages PA R T T W O...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Confirming Pages PA R T T W O Macroeconomics: Economic Growth and Business Cycles sam44222_ch04.indd 63 sam44222_ch04.indd 63 3/3/09 6:25:53 PM 3/3/09 6:25:53 PM Confirming Pages sam44222_ch04.indd 64 sam44222_ch04.indd 64 3/3/09 6:25:55 PM 3/3/09 6:25:55 PM Confirming Pages 65 C H A P T E R 4 The whole purpose of the economy is production of goods or services for consumption now or in the future. I think the burden of proof should always be on those who would produce less rather than more, on those who would leave idle people or machines or land that could be used. It is amazing how many reasons can be found to justify such waste: fear of inflation, balance-of-payments deficits, unbalanced budgets, excessive national debt, loss of confidence in the dollar. James Tobin, National Economic Policy Overview of Macroeconomics Are jobs plentiful or hard to fi nd? Are real wages and living standards growing rapidly, or are con- sumers struggling to make ends meet as price infl ation reduces real wages? Is there a period of fi nancial exuberance with stock prices rising rap- idly? Or is the central bank using monetary policy to fi ght off the effects of falling housing prices and a fi nancial crisis? What are the impacts of global- ization and foreign trade on domestic employment and output? These questions are central to mac- roeconomics, which is the subject of the following chapters. Macroeconomics is the study of the behavior of the economy as a whole. It examines the forces that affect fi rms, consumers, and workers in the aggre- gate. It contrasts with microeconomics , which studies individual prices, quantities, and markets. Two central themes will run through our survey of macroeconomics: The short-term fl uctuations in output, employ- ment, fi nancial conditions, and prices that we call the business cycle The longer-term trends in output and living stan- dards known as economic growth The development of macroeconomics was one of the major breakthroughs of twentieth-century economics, leading to a much better understand- ing of how to combat periodic economic crises and how to stimulate long-term economic growth. In response to the Great Depression, John Maynard Keynes developed his revolutionary theory, which helped explain the forces producing economic fl uctuations and suggested how governments can sam44222_ch04.indd 65 sam44222_ch04.indd 65 3/3/09 6:25:56 PM 3/3/09 6:25:56 PM Confirming Pages 66 CHAPTER 4 OVERVIEW OF MACROECONOMICS A. KEY CONCEPTS OF MACROECONOMICS THE BIRTH OF MACROECONOMICS The 1930s marked the fi rst stirrings of the science of macroeconomics, founded by John Maynard Keynes as he tried to understand the economic mechanism that produced the Great Depression....
View Full Document

Page1 / 21

sam44222_ch04_1_ - Confirming Pages PA R T T W O...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online