Lecture Macroeconomics (19/e) - Chapter 6: An introduction to macroeconomics

After reading this chapter, you should be able to: Interpret how macroeconomics studies both long-run economic growth and short-run fluctuations in output and unemployment; explain why economists focus on GDP, inflation, and unemployment when assessing the health of an entire economy; discuss why sustained increases in living standards are a historically recent phenomenon; identify why saving and investment are key factors in promoting rising living standards.

An Introduction to Macroeconomics

Performance and Policy

effective at mitigating recession?

and unemployment?

government policy more effective?

Performance and Policy

LO2

per person

Industrial Revolution

Global Perspective

LO3

consumption

Uncertainty, Expectations, and Shocks

expected

LO5

Uncertainty, Expectations, and Shocks

Demand Shocks

Cars Per Week

D M

D L

D H

900

$40,000

$37,000

$35,000

Flexible Prices

LO5

D M

D L

D H

700 900 1150

$37,000

Fixed Prices

Sticky Prices

permanent changes in demand

LO5