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What is macroeconomics? |
The study of the behavior of the whole economy. It looks at all consumers as a group, all producers as a group, all workers etc... instead of just at individuals. |
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How was macroeconomics developed? |
Macroeconomics was developed by Keynes in the 1930's. Keynes wanted to understand the underlying economic reasons for the great depression. |
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What did the Employment Act of 1946 say (in spirit, not word for word)? |
That it is the responsibility of the government to promote high employment, high rates of production and to maintain the purchasing power of the dollar. |
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What are the major questions that macroeconomics seeks to answer? |
1. What causes unemployment and how can unemployment be helped? |
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What are the goals of macroeconomics? |
High level of growth, low unemployment, price level stability |
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What is gross domestic product? |
The sum total of all of the goods and services produced by an economy in a year. |
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What is the difference between nominal GDP and real GDP? |
Nominal GDP is measured in market prices, real GDP is adjusted for inflation (so real GDP is measured in constant prices). |
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What is potential GDP? |
The maximum sustainable level of output that the economy can produce. |
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What is the unemployment rate? |
the percentage of the labor force that is unemployed. It's gotten by |
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How do we determine the labor force? |
Labor force is all of the employed people plus all of the unemployed people currently looking for jobs. It does not include people who are unemployed but are not looking for jobs. |
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What is a price index? |
a price index is a measure of price levels. One important price index is the CPI (consumer price index). |
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What is the inflation rate? |
The percent change in the overall price levels from one year to the next |
