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Class Notes Macroeconomics

The class notes cover an introduction to macroeconomics, focusing on key concepts such as GDP, inflation, unemployment, and the roles of fiscal and monetary policy. It highlights the differences between macroeconomics and microeconomics, as well as the significance of aggregate demand and supply in determining economic health. Key takeaways emphasize the importance of understanding macroeconomic indicators and government policies in stabilizing the economy.

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23 views3 pages

Class Notes Macroeconomics

The class notes cover an introduction to macroeconomics, focusing on key concepts such as GDP, inflation, unemployment, and the roles of fiscal and monetary policy. It highlights the differences between macroeconomics and microeconomics, as well as the significance of aggregate demand and supply in determining economic health. Key takeaways emphasize the importance of understanding macroeconomic indicators and government policies in stabilizing the economy.

Uploaded by

anmasu86
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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Class Notes: Introduction to Macroeconomics

Date: March 6, 2025


Professor: Dr. Adams
Course: ECON 101 - Macroeconomics

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Lecture Overview
- What is Macroeconomics?
- Key Macroeconomic Indicators
- Supply and Demand in Aggregate Markets
- Fiscal and Monetary Policy
- Inflation and Unemployment

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1. What is Macroeconomics?
- Macroeconomics studies the overall economy, including national income, growth, inflation, and
employment.
- Focuses on aggregate demand and aggregate supply.
- Examines government policies and their effects on the economy.

Key Differences from Microeconomics:


- Microeconomics focuses on individual consumers and firms.
- Macroeconomics looks at the economy as a whole.

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2. Key Macroeconomic Indicators


- Gross Domestic Product (GDP): Total market value of goods and services produced in a country.
- Nominal GDP: Measured at current prices.
- Real GDP: Adjusted for inflation.
- Inflation Rate: Measures the rate at which prices increase.
- Unemployment Rate: Percentage of the labor force that is unemployed and actively seeking work.
- Interest Rates: Affect borrowing, investment, and economic growth.

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3. Supply and Demand in Aggregate Markets


- Aggregate Demand (AD): Total demand for goods and services in an economy.
- Aggregate Supply (AS): Total production of goods and services in an economy.
- Equilibrium: Where AD meets AS, determining price levels and GDP.

Shifts in AD and AS:


- AD increases due to higher consumer spending, government spending, or investment.
- AS shifts due to changes in productivity, input costs, or technology.

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4. Fiscal and Monetary Policy


Fiscal Policy: Government uses taxes and spending to influence the economy.
- Expansionary Policy: Increases spending and lowers taxes to boost growth.
- Contractionary Policy: Decreases spending and raises taxes to control inflation.

Monetary Policy: Central bank (e.g., Federal Reserve) controls money supply and interest rates.
- Expansionary Policy: Lowers interest rates to encourage borrowing and investment.
- Contractionary Policy: Raises interest rates to reduce inflation.

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5. Inflation and Unemployment


- Inflation: General increase in prices, reducing purchasing power.
- Causes: Demand-pull (excess demand), cost-push (rising production costs), monetary factors.
- Unemployment: People actively seeking work but unable to find jobs.
- Types: Frictional (temporary), structural (mismatch of skills), cyclical (due to economic
downturns).

Phillips Curve: Shows the inverse relationship between inflation and unemployment.

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Key Takeaways:
- Macroeconomics studies large-scale economic trends and policies.
- GDP, inflation, and unemployment are key indicators of economic health.
- Aggregate demand and supply determine overall price levels and output.
- Government and central banks use fiscal and monetary policies to stabilize the economy.

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Next Lecture:
Topic: Economic Growth and Development
Reading: Chapter 5 - Long-Term Economic Growth

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