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Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1 CHAPTER 1 Introduction to Macroeconomics Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 Questions ? How much richer are we than our parents? ? How much richer will our children be than our grandparents were? ? Will changing jobs be easy or hard in five years? ? How many of us will have jobs in five years? Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 Questions ? Will the businesses we work for vanish as demand for the products they make dries up? ? Will inflation make us poor by destroying our savings or rich by eliminating our debts? Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 Macroeconomics... ? is the subdiscipline of economics that tries to answer these six questions ? is the branch of economics related to the economy as a whole Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 Macroeconomists... ? try to figure out why overall economic activity rises and falls ? try to understand what determines the level and rate of change of the price level ? study other variables that play a major role in determining the overall levels of production, income, employment, and prices Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 Why Macroeconomics Matters ? Cultural Literacy – ability to follow and participate in public debates and discussions – understanding of news reports on changes in the economy Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 Figure 1.1 - The Daily Flow of Economic News Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 Why Macroeconomics Matters ? Self-Interest – effects of macroeconomy on our daily lives – understanding of changing opportunities as the economy fluctuates Copyright ? 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 1
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