macronotes_intro

macronotes_intro - Economics 212 Principles of...

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Unformatted text preview: Economics 212 Principles of Macroeconomics Notes David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 1998 Current Version: Summer 2011 INTRODUCTION I What is Macroeconomics A Definition Definition 1 Macroeconomics is the study of how the economy as a whole grows and changes over time. B Concerns of Macroeconomics 1. Measuring how well the economy is performing. 2. Seeking to understand how the economy works. 3. Improving the performance of the economy. C Why study macroeconomics? Why should we study this field? Why is this relevant? 1. Improvements in the economy translate directly into increases in the wealth and welfare of society. For example, macroeconomics tries find ways to: Reduce unemployment. Increase wealth in less developed countries. In the long run, the difference between a well run economy and a poorly run economy can be the difference between Ethiopia and Germany. Money cannot buy happiness, but comes close: wealthier societies have more goods, better health care (longer life expectancy), more leisure time, and less pollution. 2. But, of what use is macroeconomics to the lay people, the non-experts? A good working knowledge of the tools of macroeconomics allows one to make a reasonable estimate of the current and future performance of the economy. With this knowledge, one can determine: when to buy a house. buy small stocks or large stocks (small stocks do worse than large stocks when the economy is doing poorly). 1 whether or not this job offer a competitive one. For example, you might be interested in starting a new business. During bad economic times, few people start new businesses because households do not have extra income to spend on a new product....
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macronotes_intro - Economics 212 Principles of...

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