0 Chapter 01
0 Chapter 01
0 Chapter 01
MACROECONOMICS
MISS KIRAN SHEIKH
Chapter 01
The whole purpose of the economy is production of goods or services for consumption now or in
the future. I think the burden of proof should always be on those who would produce less rather
than more, on those who would leave idle people or machines or land that could be used. It is
amazing how many reasons can be found to justify such waste: fear of inflation, balance-of-
payments deficits, unbalanced budgets, excessive national debt, loss of confidence in the dollar.
James Tobin,
National Economic Policy
outline
• DEFINATION
• OBJECTIVES AND INSTRUMENTS OF
MACROECONONICS
• THE TOOLS OF MACROECONOMICS
POLICY
• AGGREGATE SUPPLY AND DEMANDS
DEFINATION
OBJECTIVES AND INSTRUMENTS
OF MACROECONONICS
THE TOOLS OF
MACROECONOMICS POLICY
AGGREGATE SUPPLY AND
DEMANDS
Macroeconomics
• Macroeconomics is the study of the
behaviour of the economy as a whole. It
concerns the business cycles that lead to
unemployment and inflation,
• As well as the longer-term trends in
output and living standards.
OUTLINE
DEFINATION
Potential GNP
Actual GNP
Years
Objectives and Instruments
Potential GNP
Actual GDP
Years
•When an economy is operating at its potential,
unemployment is low and production is high.
2. High employment
Attack on currency.
Tools of Macroeconomic Policy
•Governments have certain instruments that they can use to
affect macroeconomic activity.