Principles of Economics Session 10
Principles of Economics Session 10
Topics To Be Covered Macroeconomics vs. microeconomics History of macroeconomics Major Concerns of macroeconomics Obiectives of macroeconomics Instruments of macroeconomics Markets and Players of macroeconomics
Topics To Be Covered Macroeconomics vs. Microeconomics History of Macroeconomics Major Concerns of Macroeconomics Objectives of Macroeconomics Instruments of Macroeconomics Markets and Players of Macroeconomics
Topics To Be Covered Definition of gross domestic product ◆ Measurement of gdp GDP GNP NNP NI PL and dpi ◆ Price Indexes AS AD, and macroeconomic equilibrium
Topics To Be Covered Definition of Gross Domestic Product Measurement of GDP GDP, GNP, NNP, NI, PI, and DPI Price Indexes AS, AD, and Macroeconomic Equilibrium
Macroeconomics vs Microeconomics Microeconomics is the study of how individual households and firms make decisions and how they interact with one another in markets Macroeconomics is the study of the economy as a whole. Its goal is to explain the economic changes that affect many households firms and markets at once
Macroeconomics vs. Microeconomics Microeconomics is the study of how individual households and firms make decisions and how they interact with one another in markets. Macroeconomics is the study of the economy as a whole. Its goal is to explain the economic changes that affect many households, firms, and markets at once
History of Macroeconomics The Great Depression was a period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s
History of Macroeconomics The Great Depression was a period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s
History of Macroeconomics Classical economists applied microeconomic models, or market clearing models, to economy-wide problems The failure of simple classical models to explain the prolonged existence of higl unemployment during the Great Depression provided the impetus for the development of macroeconomIcs
History of Macroeconomics Classical economists applied microeconomic models, or “market clearing” models, to economy-wide problems. The failure of simple classical models to explain the prolonged existence of high unemployment during the Great Depression provided the impetus for the development of macroeconomics
History of Macroeconomics oIn 1936, John Maynard Keynes published The General Theory ofEmployment, Interest, and Money. o Keynes believed governments could intervene in the economy and affect the level of output and employment. Fine-tuning was the phrase used to refer to the government's role in regulating inflation and unemployment
History of Macroeconomics In 1936, John Maynard Keynes published The General Theory of Employment, Interest, and Money. Keynes believed governments could intervene in the economy and affect the level of output and employment. Fine-tuning was the phrase used to refer to the government’s role in regulating inflation and unemployment
History of Macroeconomics The use of Keynesian policy to fine-tune the economy in the 1960s, led to disillusionment in the 1970s and early 1980s Stagflation occurs when the overall price level rises rapie idly(inflation) during periods of recession or high and persistent unemployment(stagnation)
History of Macroeconomics The use of Keynesian policy to fine-tune the economy in the 1960s, led to disillusionment in the 1970s and early 1980s. Stagflation occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation)
Major Concerns of Macroeconomics Macroeconomics answers questions like Why do production expand in some years and contract in others? o Why do prices rise rapidly in some time periods while they are more stable in others? o Why are some people unable to have the opportunity to work although they do want to work?
Major Concerns of Macroeconomics Macroeconomics answers questions like: Why do production expand in some years and contract in others? Why do prices rise rapidly in some time periods while they are more stable in others? Why are some people unable to have the opportunity to work although they do want to work?
Major Concerns of Macroeconomics ◆ Output( GDP change) Price level (Inflation) Employment ( Unemployment)
Major Concerns of Macroeconomics Output (GDP change) Price level (Inflation) Employment (Unemployment)
