Embed Size (px)
DESCRIPTION
HETAR
Citation preview
1
Chapter 7
Macroeconomics
2
Chapter 7
Macroeconomics
Macroeconomics
- is the study of the economy as a whole
3
Chapter 7
Macroeconomics
2 School of Thoughts in Macroeconomics
1.Monetarist
- states that market works best when kept to themselves.
- Adam Smith (1700) believes in Laissez Faire and suggested the “invincible hand”.
4
Chapter 7
Macroeconomics
2 School of Thoughts in Macroeconomics
2. Keynesian (John M. Keynes)
- government intervention could significantly improve the performance of the market/economy.
5
Chapter 7
Macroeconomics
2 School of Thoughts in Macroeconomics
2. Keynesian (John M. Keynes)
- that during recession (economic contraction) the government must interfere and use the pump-priming solution wherein the government will infuse money in the economy.
6
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
1.Economic Growth2.Full Employment3.Price Stability 4.Sufficiency on International Reserves5.Equitable Income Distribution6.Sustainable Development
7
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
1.Economic Growth- Increase in production of goods and services.- measured though the increase in GDP, in terms of % change of GDP per year.- growth rate could be +, -, 0- typical growth rate is less than 10%
- greater than 10% is considered high
8
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
2. Full Employment- All members off the labor force are employed.- Labor force is more or less 30% - 40% of the
population.- However, at any one time, it is not possible that all in the labor force are employed. 100% is near impossible.- But instead maintain a less than 10%
unemployment rate.
9
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
3. Price Stability- Literally price do not change.- However, prices always rise.- Question is whether prices rise gradually or abruptly.- what is gradual? 10% per year; > 10% is
considered high.
10
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
4. Sufficiency in International Reserves- Collecting currency particularly strongest.- such as US Dollar, Yen, Pound, and Euro.- used mainly for trade and depends on
importation needs.
11
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
5. Equitable Income Distribution- gap between high income and low income earners.- can be measured using Lorenz Curve
12
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
5. Equitable Income Distribution- gap between high income and low income earners.- can be measured using Lorenz Curve
13
Chapter 7
Macroeconomics
Economic Goals - Macroeconomics
6. Sustainable Development- Environment conservation.
14
Chapter 7
Macroeconomics
Circular Flow Model of the Economy
15
Chapter 7
Macroeconomics
“If you can’t explain it simply, you don’t understand it well
enough.”
- Albert Einstein
16
End of
Presentation17
japdp
