Macroeconomics
• Concerned with the big economic issues that determine you own economic well-being as well as that of your family and everyone. Each issue involves the overall economic performance of the nation rather than whether one particular individual earns more of less than another
• Global economic crisis o Began in late 2007 has created enormous losses of income and jobs for millions.
• Big three concepts o Unemployment rate
• Higher the overall unemployment rate the harder it is for individual who wants a job to find work.
• Wide spread consensus that unemployment is the most important macroeconomic issue has been further spread by the bad labor market of 09-10 o Inflation rate
• High inflation means that prices on average are rising rapidly while a low inflation rate means that prices on average are rising slowly. 0 means essentially the same over time. Retired people lose the most because what they have saved buy less. High inflation helps those who have borrowed. Creates uncertainty o Productivity growth
• The aggregate output per hour of work that a nation produces in total goods and services
• The faster aggregate productivity grows the easier it is for each member of society to improve his or her standard of living.
• If growth rate stays the same we have to sacrifice going forward by building fewer hospitals and schools. Called zero-sum society because any extra good or service enjoyed by one person requires that something be taken away from another.
• Many argue that the achievement of rapid productivity growth and the avoidance of a zero-sum society form the most important macroeconomic challenge of all
• Aggregates o The totals of the economy (3 central concepts) o Use simplified theories to ignore differences among households
• GDP o Higher the level of output, lower the unemployment rate o Higher the level of output, faster