Introduction to Macroeconomics

A single good or service that represents all goods/services in an economy, reflecting the average production level.

Analyzing the economy's total output and employment by focusing on a single imaginary good, rather than individual commodities.

Attributes like prices, interest rates, wages, profits, that influence economic production and employment.

A general increase in the price level of goods/services in an economy.

A significant decrease in economic activity, including production and employment.

Combined values of variables across all goods/services in an economy.

Distinct sub-sections of an economy (e.g., agriculture, manufacturing, services).

Sometimes a single good representation of an economy is not fully appropriate, especially when distinct sectors are present.

Objectives society aims to achieve, like employment, education, or defense, often requiring collective action.

Individual choices made by consumers and businesses about buying, selling, or producing goods and services.

Combined results of many individual economic choices, impacting the overall economy.

Government actions designed to influence the whole economy, like taxes, spending, or interest rates.

Considered the father of modern economics, known for his book 'The Wealth of Nations' advocating free markets.

An economic system where prices and production are determined by individual choices, with minimal government intervention.

The study of the relationship between economics and politics, including how government policies affect economic outcomes.

Early economic thinkers who emphasized the importance of land and agriculture in wealth creation.

Macroeconomics emerged as a distinct field after John Maynard Keynes's 1936 book, "The General Theory of Employment, Interest and Money."

Government and regulatory bodies like the RBI and SEBI make macroeconomic policies.

Macroeconomic policy objectives are often broader than individual economic benefit.

Macroeconomics builds on microeconomic principles, examining demand and supply aggregates.

Macroeconomic policies in developing countries address issues beyond just the economy, such as employment, education, health, and defense.

Developing nations require macroeconomic policies to address specific societal needs often beyond purely economic benefit.

Macro policymakers differ from individual economic decision-makers, focusing more on public goals like employment and societal targets.

Macroeconomic policies aim to direct economic resources for public needs, not only individual personal gain.

The economic theory prevailing before Keynes, believing that all willing workers will find jobs and all factories will operate at full capacity.

A school of economics that emerged in response to the Great Depression, challenging the classical view and proposing government intervention to stimulate demand and create jobs.

A severe global economic downturn from 1929 to the 1930s characterized by widespread unemployment, falling production, and business failures.

The percentage of the workforce that is actively seeking jobs but unable to find them.

The total value of goods and services produced by an economy during a specific period.

A book by Keynes published in 1919 criticizing the Treaty of Versailles and predicting its failure to create lasting peace.

A landmark economic book by Keynes, published in 1936, providing a framework for understanding macroeconomic issues, particularly unemployment and economic downturns.

Keynes challenged the classical view that the economy automatically adjusts to full employment. He argued that government intervention was necessary to stimulate demand and create jobs during periods of economic downturn.

An economic system where private individuals or companies own the means of production, goods are produced for sale in the market, and labor is bought and sold for wages.

Labor that is bought and sold in the market, with workers earning wages for their services.

Individuals who take risks and organize production in capitalist economies, aiming to make profits by hiring labor, using capital, and selling goods.

Production of goods and services in a capitalist system is motivated by the desire to make profits by selling the goods in the market.

In a capitalist economy, factors of production (like labor, capital, and land) earn their incomes through the process of production and sale of goods in the market.

Economic systems where production is often carried out by family units, with limited wage labor, and goods not solely for the market.

Societies where land ownership may not exist and resources are often shared, making them different from capitalist systems.

The basic production units in a capitalist economy, led by entrepreneurs who hire labor and capital to produce goods and services for sale in the market.

The study of the overall economy, including topics like national income, inflation, and unemployment.

The study of individual economic decisions, such as consumer choices or firm production.

The resources used in production: land, labor, capital, and entrepreneurship.

The cost of borrowing money, expressed as a percentage of the loan amount.

The price of labor, typically expressed as an hourly or annual rate.