1. MACRO-ECONOMICS Presenter: Kirkland Anderson
Associate Professor of Economics & Management

2. INTRODUCTION TO MACRO-ECONOMICS
UNIT ONE
INTRODUCTION TO MACRO-ECONOMICS

3. WHAT IS ECONOMICS?
Economics is the social science that studies the production, distribution, and consumption of goods and services
The term economics means "management of a household.
Economics aims to explain how economies work and how economic agents interact.

4. ECONOMIC AGENTS
GOVERNMENT {CENTRAL & LOCAL} GOVERNMENT AGENCIES CORPORATIONS HOUSEHOLDS

5. WHAT IS ECONOMICS?
Economics is about the decision-making through which man allocates and utilizes his limited resources in order to maximize satisfaction, given that his wants are unlimited.

6. CATEGORIES OF ECONOMICS
MICRO-ECONOMICS
MACRO-ECONOMICS

7. Macroeconomics ("big" economics) which addresses issues of unemployment, inflation, monetary and fiscal policy for an entire economy.
Microeconomics ("small" economics), which examines the economic behavior of agents (including individuals and firms).

8. MACRO-ECONOMICS
the study of the economy as a whole, and the variables that control the macro-economy.
the study of government policy {monetary & fiscal policy & supply side economics} meant to control and stabilize the economy over time, that is, to reduce fluctuations in the economy.

9. IS MACROECONOMICS THE SAME FOR ALL COUNTRIES?
the major variables describing the macro-economy are the same.
the three major policy approaches are the same
but the quality to which these policies are applied differ from one country to another; this because the political process from which these policies emerge are unique to each country.

10. THREE MAIN DIFFERENCES SEPARATE MICRO & MACROECONOMICS
First, microeconomics studies individual components, whereas macroeconomics studies the economy as a whole.
microeconomics treats the economy as so many separate components, whereas macroeconomics treats the components of the economy as one unit, as one aggregate, that is looks for relationships between the various components.

11. Second, controversy aside, government involvement in microeconomics is relatively small, and relegated to public goods, regulation, and welfare.
But, controversy notwithstanding, government involvement in macroeconomics is rather substantial, nearly total; it is only government that makes and enforces monetary and fiscal policy.

12. Third, whereas microeconomics has been around since the mid eighteenth century, macroeconomics began only as a reaction to the Great Depression of the 1930s.

13. ORIGIN OF MACROECONOMICS
John Maynard Keynes, an English economist, hence macroeconomics is also referred to as Keynesianism.
Keynes argued that by itself the market is unable to generate enough savings (capital) to sustain investment at full employment levels; and that this could be achieved only with the periodic sharp increase in government spending.

14. WHAT THIS COURSE IS ABOUT
This course places emphasis on macro-economics variables {issues}, such as:
economic growth
money
money creation
interest rate
inflation

15. exchange rate
unemployment / employment
international trade
balance of payment, national debt,
which are critical to having an understanding
of the workings of the macro-economy.

16. ECONOMIC THEORIES Classical Marxism Neoclassical economics Keynesian
Chicago
Other schools
YOU ARE TO READ UP ON THESE ECONOMIC THEORIES FOR CLASS DISCUSSION.

17. MACRO-ECONOMIC GOALS
ALL THE MACRO-ECONOMIC ACTIVITIES ARE GEARED TO ACHIEVE THE FOLLOWING GOALS:
HIGH EMPLOYMENT / LOW UNEMPLOYMENT
STABLE OR LOW INFLATION
ECONOMIC GROWTH / ECONOMIC DEVELOPMENT
STABLE EXCHANGE RATE
BOP EQUILIBRIUM

18. MACRO-ECONOMIC PROBLEMS
Macro-economic goals if not properly managed can become macro-economic problems.

19. ECONOMIC PROBLEMS
Inflation
Unemployment
slow growth
balance of payments problems
fluctuating exchange rate

20. Goal conflict may also give rise to macro-economic problems.

21. WORKSHEET QUESTIONS
DISCUSS WHY JAMAICA LAG SO MUCH IN ECONOMIC GROWTH BEHIND THE OTHER ISLANDS IN THE CARIBBEAN.
WHY IS THE CONTROL OF INFLATION GIVEN SUCH A HIGH PRIORITY IN MACROECONOMIC POLICY-MAKING?