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Introduction to Macroeconomics Concepts

This document provides an introduction to macroeconomics. It discusses key macroeconomic issues like inflation, unemployment, and economic growth. It also covers macroeconomic concepts such as the business cycle, indicators of economic success, macroeconomic policy instruments, aggregate supply and demand, and major schools of macroeconomic thought. The goal of macroeconomics is to understand and influence a country's overall economic performance and growth.

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PranavKathuria
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6 views10 pages

Introduction to Macroeconomics Concepts

This document provides an introduction to macroeconomics. It discusses key macroeconomic issues like inflation, unemployment, and economic growth. It also covers macroeconomic concepts such as the business cycle, indicators of economic success, macroeconomic policy instruments, aggregate supply and demand, and major schools of macroeconomic thought. The goal of macroeconomics is to understand and influence a country's overall economic performance and growth.

Uploaded by

PranavKathuria
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Session 1

MACROECONOMICS
An Introduction

1
What Macroeconomics is
about?

Study of the structure and performance


of national economies and of the
policies that government use to try to
affect economic performance.

2
Main Issues in
Macroeconomics
• Inflation: What are the causes, consequences
and remedies?
• Unemployment: How can it be reduced?
• Output and Growth: How to increase it?

HOW TO ACHIEVE HIGHER ECONOMIC GROWTH


WITH STABILITY?!!!

3
Business Cycles
The business cycle is the short-term tendency for
output and employment to fluctuate around their
long-term trend path.
B

Output
C
D Actual output

A
A: Slump
B: Recovery
C: Boom
Trend output
D: Recession
B

Time
4
Indicators of Economic Success

• High Output (GDP)


• Low Unemployment
• Stable Prices

Instruments of Macroeconomic
Policy

• Fiscal policy
• Monetary policy
• Trade policy
5
Tools of
Macroeconomics
• Aggregate Supply: Prices and costs,
potential output, resources (K,L,l
and T) determine total production.
• Aggregate Demand: Money and
prices, spending and taxes, other
forces determine demand.

AS ≡ AD
Ideal economic condition
6
AD and AS schedules

The interaction of AS and AD


determines output,
employment, prices, inflation,
foreign trade and overall
economic situation in a
country.
7
Time frame for Macro
Analysis

The long run

The short run

The medium run

8
9
Major Schools of Thought

Classical School, since 1776

Keynesian School, since 1936

10

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