Thursday

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 2 of 15
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Almost every day in the media we see some statistic about the economy.
An economic statistic might measure:
· total income of everyone in the economy - GDP
· rate prices are rising - inflation
· percentage of the labor force out of work - unemployment
· total spending at stores - retail sales
· imbalance of trade between the United States and the rest of the world - the trade deficit
These statistics are macroeconomic measurements.
They tell us something about the entire economy, which is macroeconomics, rather than telling us about a particular household, firm, or market, which is microeconomics.
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Some questions macroeconomists address are:
· why is average income higher in some countries than in others?
· why do employment and production increase in some years and decrease in others?
· why do prices sometimes rise rapidly but at other times are stable?
· what can government do, if anything, to help grow income, employment, and production, and keep inflation low?
These are all macroeconomic questions because they concern the entire economy.
Because the whole economy is a collection of many households and many firms interacting in many markets microeconomics and macroeconomics are closely linked.
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The basic tools of supply and demand are central to macroeconomic analysis as they are to microeconomic analysis.
Over the next two chapters we discuss some of the macroeconomic data economists and policymakers use to monitor the performance of the overall economy.
This chapter covers gross domestic product - GDP.
GDP measures the total income of a nation and is the most closely watched macroeconomic statistic.
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microeconomics and macroeconomics
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