1. The Science of Macroeconomics
1. Real GDP measures the total income of everyone in the economy
(adjusted for the level of prices).
2. The unemployment rate measures the fraction of the labor force that is out
3. There are repeated periods duri
9. Introduction to Economic Fluctuations
1. Economists call these short-run uctuations in output and employment the
2. In the long run, prices are exible and can respond to changes in supply or
demand. In the short run, many prices are sti
2. The Data of Macroeconomics
1. Economists needed some way to combine many individual experiences
into a coherent whole.There was an obvious solution:as the old quip
goes,the plural of anecdoteis data.
2. Gross domestic product, or GDP, tells us the nati
7. Economic Growth I
1. Our primary task is to develop a theory of economic growth called the
Solow growth model.
2. We therefore call k* the steady-state level of capital.
3. The steady state represents the long-run equilibrium of the economy.
4. The ste
10. Aggregate Demand
1. The model of aggregate demand developed in this chapter, called the IS
LM model, is the leading interpretation of Keyness theory.
2. The two parts of the ISLM model are, not surprisingly, the IS curve and
the LM curve.
3. To develo
3. National Income: Where It Comes From
and Where It Goes
1. Factors of production are the inputs used to produce goods and services.
2. Economists express the available technology using a production function.
3. Many production functions have a property
5. The Open Economy
1. Dening net exports to be exports minus imports (NX = EX IM),the
identity becomes Y = C + I + G + NX.
2. Another name for net exports is the trade balance, because it tells us how
our trade in goods and services departs from the benc
8. Economic Growth II
1. We now write the production function as Y = F(K,L E), where E is a new
(and somewhat abstract) variable called the efciency of labor.
2. The term L E measures the number of effective workers.
3. This form of technological progress
4. Money and Ination
1. In 2000 the Times cost 75 cents,the price of a home was $166,000,and
the average wage was $14.26 per hour. This overall increase in prices is
2. Even when the U.S ination problem became severe during the 1970s,
1. Here we examine the determinants of the natural rate of unemployment
the average rate of unemployment around which the economy uctuates.
2. The unemployment caused by the time it takes workers to search for a job
is called frictional un