Chapter 22 Introduction to Macroeconomics Unit 1 Chapter 22 Introduction to Macroeconomics

I. The Difference Microeconomics: decisions made by individuals and firms (ex. Workers to hire) Macroeconomics: examines aggregate behavior of economy (ex. Level of prices, unemployment)

II. Theories and Policies Self-regulating: Invisible hand cures economic problems- no government intervention. Monetary Policy: changes in quantity of money to change interest rates and cure economic woes. Fiscal Policy: changes in government spending and taxes to affect economic woes.

III. The Business Cycle Short-run alteration between downturns and upturns in the economy. Depression: Deep prolonged downturn. Recession: Economic downturn when GDP and employment are falling. Expansion (recovery): Economic upturns when GDP and employment are rising.

IV. Inflation and Deflation Inflation: rising price level Deflation: falling price level Inflation rate: percent change price level

V. International Trade Open economy: Country that trades with other countries. Trade deficit: Value of goods bought from foreigners is more than the value of goods it sells. Trade surplus: Value of goods bought from foreigners is less than the value of goods it sells.

Researching Major Economists Assignment Write the monologue to a talk show that interviews the following major economists: Adam Smith, John Maynard Keynes, Milton Friedman. The title of the talk show can be up to you however, the point of this episode is to ultimately decide which economist has had the most profound impact on our modern world. As the writer of the monologue be sure to try and get the following points addressed by your line of questioning: Their backgrounds What school of economic thought they are responsible for creating or endorsing. The positives and negatives of their economic theory. 2-4 pages Must be typed and double spaced (size 12 font).