Class 01, 8/02/2021 (After Midterm)

Chapter 05, Page 114, Macroeconomic Measurement

Fundamental Concepts of Macroeconomics

Macroeconomics and its main focus

Macroeconomics is the branch of economics that deals with the entire economy.
Most discussions in macroeconomics focus on one or more of the following:

1. Macroeconomic problems

2. Macroeconomic theories

3. Macroeconomic policies

4. Different views of how the economy works

Macroeconomic Problems

Here are a few macroeconomic problems:

1. High inflation rate

2. High unemployment rate

3. High interest rates

4. Low economic growth

When it comes to these macroeconomics problems and others, macroeconomists

want to know two things: (1) what is the cause of the problem? and (2) What needs
to be done to end the problem?
Macroeconomic Variables

1. Gross Domestic Product (GDP)

2. Aggregate Demand and Supply (AD and AS)
3. National Savings
4. Inflation
5. Unemployment
6. Money Supply
7. Price level……

Two macroeconomic policies

Fiscal Policy

Changes in government expenditures and/or changes in taxes to achieve particular

macroeconomic goals.

Monetary Policy

Changes in the money supply, or the rate of growth of the money supply, to
achieve particular macroeconomic goals.
Who are employed and unemployed?

According to the BLS, employed persons consist of:

• All persons who did any work for pay or profit during the survey reference week.

• All persons who did at least 15 hours of unpaid work in a family-operated

enterprise

• All persons who were temporarily absent from their regular jobs because of
illness, vacation, bad weather, industrial dispute, or various personal reasons.

According to the BLS, unemployed persons consist of:

• All persons who did not have jobs, made specific active efforts to find a job
during the prior four weeks, and were available for work.
• All persons who were not working and were waiting to be called back to a job
from which they had been temporarily laid off.

Types of Unemployment