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    Macro 01

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    Malcolm Holmes
    This document provides an introduction to macroeconomics. It discusses that macroeconomics focuses on analyzing whole economies and addressing questions like what causes recessions and unemployment. It examines macroeconomics from three perspectives: macroeconomic goals of growth, low unemployment, and low inflation; frameworks like aggregate demand and supply; and policy tools of monetary and fiscal policy. National governments use monetary policy involving interest rates and money supply and fiscal policy involving taxes and spending to influence the macroeconomy.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Macro 01

    Uploaded by

    Malcolm Holmes
    10 views14 pages
    This document provides an introduction to macroeconomics. It discusses that macroeconomics focuses on analyzing whole economies and addressing questions like what causes recessions and unemployment. It examines macroeconomics from three perspectives: macroeconomic goals of growth, low unemployment, and low inflation; frameworks like aggregate demand and supply; and policy tools of monetary and fiscal policy. National governments use monetary policy involving interest rates and money supply and fiscal policy involving taxes and spending to influence the macroeconomy.

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    This document provides an introduction to macroeconomics. It discusses that macroeconomics focuses on analyzing whole economies and addressing questions like what causes recessions and unemployment. It examines macroeconomics from three perspectives: macroeconomic goals of growth, low unemployment, and low inflation; frameworks like aggregate demand and supply; and policy tools of monetary and fiscal policy. National governments use monetary policy involving interest rates and money supply and fiscal policy involving taxes and spending to influence the macroeconomy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views14 pages

    Macro 01

    Uploaded by

    Malcolm Holmes
    This document provides an introduction to macroeconomics. It discusses that macroeconomics focuses on analyzing whole economies and addressing questions like what causes recessions and unemployment. It examines macroeconomics from three perspectives: macroeconomic goals of growth, low unemployment, and low inflation; frameworks like aggregate demand and supply; and policy tools of monetary and fiscal policy. National governments use monetary policy involving interest rates and money supply and fiscal policy involving taxes and spending to influence the macroeconomy.

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    You are on page 1of 14

    MODULE 01

    Introduction to the Macroeconomic


    Perspective
    Macroeconomics focuses on the
    economy as a whole (or on whole
    economies as they interact).
    What causes recessions?
    What makes unemployment stay high
    when recessions are supposed to be
    over? Why do some countries grow
    faster than others?
    Why do some countries have higher
    standards of living than others? These
    are all questions that
    macroeconomics addresses.

    Macroeconomics involves adding up


    the economic activity of all
    households and all businesses in all
    markets to get the overall demand
    and supply in the economy.
    We will study macroeconomics from
    three different perspectives:
    1.What are the macroeconomic goals?

    2.What are the frameworks economists


    can use to analyze the macroeconomy?

    3.Finally, what are the policy tools


    governments can use to manage the
    macroeconomy?
    Macroeconomic Goals, Framework,
    and Policies. This chart shows what
    macroeconomics is about.
    The box on the left indicates a
    consensus of what are the most
    important goals for the macro
    economy, the middle box lists the
    frameworks economists use to analyze
    macroeconomic changes (such as
    inflation or recession), and the box on
    the right indicates the two tools the
    federal government uses to influence
    the macro economy.
    Goals
    In thinking about the overall health of
    the macroeconomy, it is useful to
    consider three primary goals:
    economic growth, low
    unemployment, and low inflation.
    Economic growth ultimately
    determines the prevailing standard of
    living in a country.
    Economic growth is measured by the
    percentage change in real (inflation-
    adjusted) gross domestic product. A
    growth rate of more than 3% is
    considered good.
    Unemployment, as measured by the
    unemployment rate, is the percentage
    of people in the labor force who do
    not have a job. When people lack jobs,
    the economy is wasting a precious
    resource-labor, and the result is lower
    goods and services produced.
    Unemployment, however, is more
    than a statistic—it represents people’s
    livelihoods. While measured
    unemployment is unlikely to ever be
    zero, a measured unemployment rate
    of 5% or less is considered low
    (good).
    Inflation is a sustained increase in the
    overall level of prices, and is measured
    by the consumer price index. If many
    people face a situation where the
    prices that they pay for food, shelter,
    and healthcare are rising much faster
    than the wages they receive for their
    labor, there will be widespread
    unhappiness as their standard of
    living declines.
    Frameworks
    In microeconomics, we used the
    theories of supply and demand; in
    macroeconomics, we use the theories
    of aggregate demand (AD) and
    aggregate supply (AS).
    Policy Tools
    National governments have two tools
    for influencing the macroeconomy.
    The first is monetary policy, which
    involves managing the money supply
    and interest rates. The second is fiscal
    policy, which involves changes in
    government spending/purchases and
    taxes.
    THANK YOU.

    • References:
    • https://opentextbc.ca/principlesofeconomics/chapter/introdu
    ction-to-the-macroeconomic-perspective/

    • For Classroom discussion use only

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