What is Macroeconomics?
Macroeconomics is the study of the large economy
as a whole. It is the study of the big picture.
Instead of analyzing one consumer, we analyze everyone.
Instead of one business we study all businesses.
Why study t
Suppose that the following statements describe the
current state of the U.S. economy.
economy is at full employment
The consumer price index is rising at 2 percent
The federal government budget deficit is equal
to $200 billion (5 percent o
3. Assume an economy with no international sector.
A) Using a correctly labled money-market graph,
show how a decrease in the money supply
will affect interest rates.
B) Explain how the change in the interest rate you
identified in part (
Problem Set #3
Aggregate Demand and Aggregate Supply
1. ( _/10) Key Concepts
Define and explain each concept and give specific examples:
The Multiplier Effect and spending multiplier ( _/5)