Introduction to Macroeconomics Fatma Taskin Fall 2015

 The study of whole economy.  Not individual markets,  Not individual firm or consumer,  Not individual price level; Macroeconomics

 The study of whole economy.  Not individual markets,  Not individual firm or consumer,  Not individual price level;  Which ‘whole economy’? Macroeconomics

 Principles that govern the workings of an economy, ex. US economy, Turkish economy or Chinese economy, Subject of Macroeconomics

 Principles that govern the workings of an economy, ex. US economy, Turkish economy or Chinese economy,  Sovereign Nations Subject of Macroeconomics

 Among nations (internationally) commodities, services are being sold and bought.  Financial assets are being bought and sold,  Capital goods (machinery) etc are exchanged.  What is not allowed to be exchanged? Or move internationally? Labor... Why sovereign nations?

 has their own currency,  has their own government, who does spending and collect taxes, Each sovereign nation

 US?  Luxembourg?  Turkey?   China? Which macroeconomy is the best?

 Total Output Produced Ex. 3.7 billion tons of cement, 19 million tons of wheat, 733 thousand cars... How do we measure economic performance?

 Total Output Produced Ex. Ex. 3.7 billion tons of cement, 19 million tons of wheat, 733 thousand cars...  Total value of output, Value = price x quantity How do we measure economic performance?

 Total Output Produced Ex. 3.7 billion tons, 19 million tons or 733 thousand cars...  Total value of output, Value = price x quantity  Sum of all final goods and services production in a year in one country How do we measure economic performance?

 Total Output Produced Ex. 3.7 billion tons of cement, 19 million tons of wheat or 733 thousand cars...  Total value of output, = price x quantity=  Sum of all final goods and services production in a year in one country GROSS DOMESTIC PRODUCT (GDP) How do we measure economic performance?

GDP 2014 trillion US dollar World77.3 EU18.5 US17.4 China10.3. Canada1.7 Turkey0.8 Sweden0.5 Which country has the largest GDP?

GDP 2014 trillion US dollar PopulationGDP per person US dollar World77.3 EU ,300,00036,268 US ,786,00054,597 China10.31,371,980,0007,589. Canada1.735,749,60050,398 Turkey0.877,695,90410,482 Sweden0.59,793,17258,491 Which country has the largest GDP?

 GDP per capita = GDP per person  GDP per capita = GDP/population  Ex: if GDP grows at 3 % per year and population grows at 3 % per year what happens to the ratio? How can you increase a country’s GDP per person?

Two facts of macroeconomics  GDP increases almost every year... GROWTH  GDP increase fluctuates... BUSINESS CYCLES

 Course web page: ~taskin/teaching/econ 102  You need to have a correct  Lectures: Mondays and Thursdays in V02  Recitation hours: 2 hours every week, Course plan

 1 midterm,  1 final exam,  6 homeworks, discussed in recitation hours,  6 quizzes  Participation; Requirements

 Miss more than 2 quizzes,  If you have less than 30 % of the possible points before the final exam. FZ Conditions

 Strongly recommended;  Participation is important as much as attendance. Attendance

 Strongly recommended;  Participation is important as much as attendance.  You may come in late,  BUT do not leave while lecture is in session.  Try to be mentally present, not just physically. Attendance