Chap023 - Copy (2) - Chapter 23 - An Introduction to...

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Chapter 23 - An Introduction to Macroeconomics CHAPTER TWENTY-THREE AN INTRODUCTION TO MACROECONOMICS CHAPTER OVERVIEW As you know from Chapter 1, macroeconomics studies the behavior of the economy as a whole. It is primarily concerned with two topics: long-run economic growth and the short-run fluctuations in output and employment that are often referred to as the business cycle. These phenomena are closely related because they happen simultaneously. Economies show a distinct growth trend that leads to higher output and higher standards of living in the long run, but in the short run there is a great deal of variability. Sometimes growth proceeds more rapidly and sometimes it proceeds more slowly. It may even turn negative for a while so that output and living standards actually decline, a situation referred to as a recession. This chapter provides an overview of the data that macroeconomists use to measure the status and growth of an entire economy as well as a preview of the models that they use to help explain both long-run growth and short-run fluctuations. This is a new chapter in the 18 th edition. It serves to full modernize the book’s presentation of macroeconomics. INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1. Understand the basic statistical tools and measures that economists use to analyze the economy. 2. Differentiate between nominal GDP and Real GDP (Gross Domestic Product). 3. Understand the basic concept of unemployment. 4. Understand the basic measure of inflation. 5. Explain the miracle of modern economic growth. 6. Understand, and define, the basic concepts of savings and investment. 7. Differentiate between financial investment and economic investment. 8. Understand the role of expectations and uncertainty in economic activity. 9. Explain how unanticipated shocks to supply and demand affect the economy under fixed and flexible prices. 10. Explain the role of inventories in the economy. 11. Explain the difference between ‘sticky prices’ and ‘flexible prices and understand the basic evidence supporting the two concepts. 12. Define and identify terms and concepts listed at the end of the chapter. 23-1
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Chapter 23 - An Introduction to Macroeconomics LECTURE NOTES I. Learning objectives – In this chapter students will learn: A. How macroeconomics studies both long-run economic growth and short-run fluctuations in output and unemployment. B.
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Chap023 - Copy (2) - Chapter 23 - An Introduction to...

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