Macroeconomics

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Introduction to Macroeconomics Prepared by: Prepared by by:: Fernando Quijano Mr. Eduard R. Chua  and Yvonn Quijano

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&ntro'uction to (acroeconomics •

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Microeconomics e)amines Microeconomics  e)amines the beha*ior of in'i*i'ual 'ecision+maing units-business firms an' househol's. Macroeconomics 'eals Macroeconomics  'eals ith the econom" as a hole it e)amines the beha*ior of economic aggregates such as aggregate income, consumption, in*estment, an' the o*erall le*el of prices. •

 Aggregate behavior  refers  refers to the beha*ior of all househol's an' firms together

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&ntro'uction to (acroeconomics •

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(icroeconomists generall" conclu'e that marets or ell. (acroeconomists, hoe*er, obser*e that some important prices often seem 1stic". Sticky prices are prices are prices that 'o not ala"s a'3ust rapi'l" to maintain the eualit" beteen uantit" supplie' an' uantit" 'eman'e'. Flexible prices

&ntro'uction to (acroeconomics

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(acroeconomists often reflect on the microeconomic principles un'erl"ing macroeconomic anal"sis, or the microeconomic foundations of macroeconomics.

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he !oots of (acroeconomics •

he Great Depression as a perio' of se*ere economic contraction an' high unemplo"ment that began in %626 an' continue' throughout the %6$0s.

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he !oots of (acroeconomics •

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lassical economists applie' microeconomic mo'els, or 1market clearing mo'els, to econom"+i'e problems. Hoe*er, simple classical mo'els faile' to e)plain the prolonge' e)istence of high unemplo"ment 'uring the 8reat 9epression. his pro*i'e' the impetus for the 'e*elopment of macroeconomics.

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he !oots of (acroeconomics •

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&n %6$, John Maynard Keynes publishe' The General Theory of Employment, Interest, and Money . Ke"nes belie*e' go*ernments coul' inter*ene in the econom" an' affect the le*el of output an' emplo"ment. 9uring perio's of lo pri*ate 'eman', the go*ernment can stimulate aggregate 'eman' to lift the econom" out of recession.

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!ecent (acroeconomic Histor" •

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Fine-tuning  as the phrase use' b" ;alter Heller to refer to the go*ernment