Macroeconomics The Big Picture

Modern Macro is “new.” Before 1930s, the economy was thought to be primarily self-regulating (thought that markets would ‘clear’ by themselves). Production and Unemployment in the Great Depression changed that view. Production was extremely low. Employment was extremely low. John Maynard Keynes argues a depressed economy is the result of inadequate spending and ‘sticky’ prices. Keynes also argues the government could help out – if C falls, G could rise to temporarily take its place.

Government Policies Fiscal Policy Monetary Policy Spending and Taxes Changes in the money supply

The Business Cycle

The Business Cycle

Business Cycle 3 Key Economic Indicators Production (GDP) Employment (The Unemployment Rate) Inflation (CPI, PPI, GDP Deflator)

The Business Cycle The National Bureau of Economic Research determines when recessions begin and end. Up to date data can be found here: http://www.nber.org/cycles/cyclesmain.html

The Business Cycle & Employment

Comparing Recessions

Comparing Recessions

Comparing Recessions Current vs. Great Depression

Economic Growth

Economic Growth

Economic Growth Economic Growth is a relatively new concept. Only recently did countries see what we think of as “growth.” Are you richer than the “richest man ever” ? Net worth estimated up to $663 Billion in today’s dollars (adjusting for inflation)