chapter four.ppt

1、CHAPTER 4 Overview of Macroeconomics,Macroeconomicsis the study of the behavior of the economy as a whlole. It examines the forces that affect many firms, consumers, and workers at the same time.,Output,Gross domestic product(GDP)is the measure of the market value of all final goods and services (be

2、er, cars, rock concerts, donkey rides, and so on) prduced in a country during a year. Potential GDPrepresents the maximum sustainable level of output that the economy can produce.,High Employment,Low Unemployment,Unemployment rateis the percentage of the labor force that is unemployed,Price Stabilit

3、y,Consumer price index(CPI)which measures the average price of goods and services bought by consumers. Inflation rateis the percentage change in the overall level of price form one year to the next.,The Tools of Macroeconomic Policy,A.Fiscal Policy B.Monetary Policy,Fiscal Policy,Fiscal Policydenote

4、s the use of taxes and government expenditures. Government expenditures: 1.government purchasesthese comprise spending on goods and services. 2.government transfer paymentsboost the incomes of targeted groups such as the elderly or the unemployed.,Monetary Policy,Monetary Policythe second mafor inst

5、rument of macroeconomic policy, which the government conducts through managing the nations money, credit, and banking system.,International Linkages,Net Exprotsis the numerical difference between the value of exports and the value of imports.,Aggregate Supply and Demand,Aggregate Supplyrefers to the

6、 total quantity of goods and services that the nations businesses willingly produce and sell in a given period. Aggregate demandrefers to the total amount that different sectors in the economy willingly spend in a given peeriod.,Aggregate Supply and Demand Curves,P,Q,AS,AD,E,C,B,0,3000,150,200,Real GDP (billions),Price index for all commodities,Macroeconomic Equilibrium,Macroeconomic Equilibriumis a combination of overall price and quantity at which all buyers and sellers are satisfied with their purchases, sales, a