Introduction to Macroeconomics

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The main goal of macroeconomics are to study;
-how the economy is behaving
-which factors are causing the economy to grow or shrink
Key areas of macroeconomics study
-economic indicators
-economic challenges
-economic models
Gross Domestic Product (GDP)
is the value of goods and services produced in a country in a year
Macroeconomics studies the challenges that entire economics face, such as;
-keeping workers employed
-keeping prices stable
Macroeconomics studies how money functions within the economy.
-How is money used?
-How does an economy as a unit make money?
-How do governments use money to influence economic activity?
Economics create models to understand how the economy works.
Models can:
-identify patterns
-predict changes
What does macroeconomics focus on trying to understand?
-the changes that take place within an economic system as a whole
-the challenges that economic systems face, such as inflation
-specific models to help understand patterns of change within an economic system
Studying macroeconomics helps people understand, predict, and anticipate;
-economic actions taken by the government
-political debates regarding governmental actions
-major economic events, such as periods of high unemployment or inflation
-supply is the amount of a good or service that a producer provides to consumers
-supply is determined by price and production costs
-demand is the amount of a good or service that consumers are willing and able to purchase
-demand is determined by price and the need for the good
Prices are set when interactions between producers and consumers reach equilibrium.
-producers are willing to supply a good for a specific price
-consumers are willing and able to purchase the good at the same price
Macroeconomics studies supply and demand in the aggregate, which means;
-the total amount of supply
-the total amount of supply
The interaction of supply and demand between individual producers and consumers is studied within________.
In microeconomics, the point at which supply and demand meet is called the_______price.
In macroeconomics, to study the aggregate means to study______.
total supply and demand
Aggregate demand is the total demand for a good or service produced within an economy.
-this is measured at a specific price during a period of time.
Aggregate supply is the total number of goods and services produced at a specific price during a period of time.
-is also known as total output
-can change due to changes in price, taxes, or technology
Aggregate supply reacts very specifically to economic changes.
-supply behaves differently in the short term than the long term
-producers need time to respond to economic changes
Macroeconomics equilibrium is achieved when aggregate supply and aggregate demand meet.
-equilibrium occurs when a society is using its resources efficiently
Aggregate supply and aggregate demand are similar to supply and demand in that prices must reach____to benefit both producers and consumers.
When macroeconomic equilibrium is achieved, a society is using its resources_____.
Short-term aggregate supply happens in a curve instead of a straight line, because economic changes_____.
take time
The circular flow model demonstrates interactions within the economy, including;
-interactions between households and firms
-interactions between different sectors of the economy
How does the circular flow model represent the interactions between households and firms?
The model shows that firms and household benefit from one another.
Leakage factors pull money out of an economic system. Examples include;
The government sector collects taxes, which are considered____.
Households provide____to firms, which assists in the production of goods and services.
factors of production
The foreign sector purchases exports, which are considered____.
Which examples would a student of macroeconomics study?
-the effects of a tax increase on the gross domestic product
-the influence of economic challenges, such as inflation and stagflation
-the result of a major government spending program on the national unemployment rate
When economists study aggregate supply and aggregate demand, what are they studying?
-the total supply and demand of goods produced at a given price
In the circular flow model, households provide____to firms.
factors of production
In return, within the circular flow model, firms provide households with____.
goods and services
Firms then provide____to households.
Households provide their____to firms.
Government spending by the government sector
Investments made by the financial sector
Taxes collected by the government sector
Savings by individuals outside a bank
Exports purchased by the foreign sector
Which of these are among the macroeconomic goals of governments?
-steadily increasing the gross domestic product
-keeping citizens employed
-managing prices throughout the economy
Categories: Macroeconomics