In assessing the health and development of an economy, macroeconomists focus on:  Real GDP  Unemployment  Inflation 1©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1

 Real GDP measures the value of final goods and services produced within the borders of a given country during a given time period, typically a year.  To calculate real GDP, nominal GDP must first be calculated 2©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1

 The dollar value of all goods and services produced within the borders of a given country using the country’s current prices during the year the goods and services were produced. 3©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1

 A failure of the economy to fully employ its labour force  Occurs when a person cannot get a job despite being willing to work and actively seeking work 4 ©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1

 An increase in the overall level of prices.  Can cause decreases in standard of living  surprise jump in inflation reduces the purchasing power of people’s savings 5©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1

 Can governments promote long-run economic growth?  Can governments reduce the severity of recessions by smoothing out short-run fluctuations?  Are certain government policy tools, more effective at mitigating short-run fluctuations than other government policy tools, e.g. monetary policy versus fiscal policy?  Is there a trade-off between lower rates of unemployment and higher rates of inflation?  Does government policy work best when it is announced in advance or when it is a surprise? 6©2013 McGraw-Hill Ryerson Ltd.Chapter 4, LO1