Macroeconomics Overview

Macroeconomics

• Macroeconomics studies the entire economy, covering aggregate output, unemployment, inflation, and economic growth.
• Key macroeconomic goals are stable prices, full employment, and sustained economic growth.
• Gross Domestic Product (GDP) measures the total market value of all final goods and services produced within a country's borders in a specific time period.
• GDP tracks a country's economic performance.
• GDP components include consumption, investment, government spending, and net exports.
• Inflation is a sustained rise in the general price level of goods and services.
• Inflation is measured by indices like the Consumer Price Index (CPI).
• Unemployment is the portion of the labor force actively seeking work but unable to find it.
• Unemployment types include frictional, structural, and cyclical.
• Economic growth is the increase in the production of goods and services over time.
• Economic growth factors are technological advancements, capital accumulation, and human capital improvements.
• Business cycles are alternating periods of expansion and contraction in economic activity.
• Fiscal policy uses government spending and taxation to influence the economy.
• Monetary policy involves central bank actions to control the money supply and interest rates to stabilize the economy.

Microeconomics

• Microeconomics analyzes individual economic agents (consumers, firms, and markets).
• It examines how individual choices affect resource allocation and prices in specific markets.
• Supply and demand determine prices and quantities in a market.
• Supply is the amount producers offer at various prices.
• Demand is the amount consumers want to purchase at various prices.
• Market equilibrium is where quantity supplied equals quantity demanded at a particular price.
• Elasticity measures the responsiveness of one variable to changes in another.
• Price elasticity of demand measures how quantity demanded changes with price.
• Price elasticity of supply measures how quantity supplied changes with price.
• Market structures include perfect competition, monopoly, oligopoly, and monopolistic competition.

Economic Systems

• Economic systems organize the production, distribution, and consumption of goods and services.
• Examples of economic systems are capitalism, socialism, and mixed economies.
• Capitalism features private ownership, free markets, and profit motives.
• Socialism emphasizes public ownership and central planning.
• Mixed economies combine elements of both capitalism and socialism.

Economic Indicators

• Economic indicators are statistics reflecting an economy's health and performance.
• Examples include GDP, inflation rate, unemployment rate, and consumer confidence.
• Policymakers use these indicators to monitor and make economic decisions.
• Leading indicators predict future trends.
• Lagging indicators reflect past economic conditions.