1. Introduction to Macroeconomics
Unit 3
Economics Honors
Rixie

2. Understanding Macroeconomics
Section 1

3. Two Major Goals of Macroeconomics
To study:
How the economy is behaving
Which factors are causing economy to grow/shrink

4. Gross Domestic Product (GDP)
Total value of goods and services produced in a country or state in a given year
Primary economic indicator
Summarizes total output

5. Economic Challenges Keeping workers employed
Problem: high unemployment
Keeping prices stable
Problem: inflation

6. Money Models Macro looks at: How it is used Macro uses them to:
How an economy makes $
How governments use money to influence economic activity
Macro uses them to:
Help identify patterns and predict changes to the economy

7. Impact of Studying Macroeconomics
People can anticipate:
Economic actions taken by the government
Political debates regarding government actions
Major economic events, such as periods of high employment or inflation

8. What area of economics focuses on the interactions between individual consumers and producers?
aggregates
macroeconomics
microeconomics
markets

9. Macroeconomics Aggregates
Section 2

10. Review of Microeconomics
Focuses on direct interactions between producers and consumers
Supply – determined by price and costs of production
Demand – determined by price and need/desire for the good

11. Countries, not Markets
Macroeconomics looks at supply and demand in the aggregate (think “total”)
Aggregate demand – the total quantity of goods and services demanded in an economy

12. Aggregate Supply
The total quantity of goods and services produced in an economy at various price levels
A.K.A. total output
Can change as a result of:
Corporate taxes
Regulations
Technology

13. Long Run Aggregate Supply Short Run Aggregate Supply
Vertical curve (LRAS)
Determined by all factors of production
Upward sloping curve
Producers need time to respond to changes

14. Macroeconomic Equilibrium
Found where AS and AD meet
Occurs when a society is using all resources efficiently
Long-run equilibrium indicates operating efficiently at full-employment

15. The aggregate is a type of economic system.
the total number of goods demanded or supplied.
a form of revenue.
the total profit made on sales.

16. According to this graph, how does supply behave in the long run?
Output remains constant.
Output increases.
Output cannot be predicted.
Output decreases.

17. The Circular Flow Model
Section 3

18. What does it do??? Demonstrates interactions within the economy:
Between households (consumers) and firms (producers)
Between sectors of the economy (financial, gov’t, foreign)
Shows that firms and households benefit from each other

19. Injector Factors:
Ways that sectors bring money into the economy
Leakage Factors:
Ways that sectors remove money from the economy

20. Which statement best describes the circular flow model?
The model represents the movement of money and resources throughout the economy.
The model represents the interactions within sectors.
The model represents the flow of goods and services abroad.
The model represents the changing relationships between actors.

21. The End – Yayyyyy!