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Chapter11AnIntroduction
toOpen
EconomyMacroeconomics
Copyright?2011PearsonAddison-Wesley.Allrightsreserved.11-2ChapterObjectivesAnalyzetherelationshipofbalanceofpaymentsandtheexchangeratetoeachotherandtothenationaleconomyFocusparticularlyontheinteractionsofthecurrentaccount,exchangerates,consumption,investment,andgovernmentspendingExploretheroleofnationalgovernmentsintheeconomy:especiallytheimpactofmacroeconomicpoliciesontheexchangerateandthecurrentaccount
Copyright?2011PearsonAddison-Wesley.Allrightsreserved.11-3Introduction:TheMacroeconomyinaGlobalSettingSincetheGreatdepressionofthe1930s,nationalgovernmentshaveheldacentralroleinguaranteeingeconomicgrowth,employment,andpricestabilityHowever,besidespolicies,theday-to-dayoperationsofgovernments,consumers,andbusinessesalikehaveamajorimpactonthecurrentaccountandexchangerates
Copyright?2011PearsonAddison-Wesley.Allrightsreserved.11-4TABLE11.1
TheMainEconomicAgents
intheMacroeconomy
Copyright?2011PearsonAddison-Wesley.Allrightsreserved.11-5AggregateDemandandAggregateSupplyIntermediateinputs:GoodspurchasedbyonebusinessfromanotherforuseinproductionAggregatesupplyanddemandshowtherelationshipbetweeneconomicoutput(GDP)andpricelevelsinthemacroeconomyatagivenpointintime
AggregateDemandandAggregateSupply(cont.)TheaggregatesupplycurvecallsattentiontothreeregionsofGDP:under,nearing,andatorbeyondfullemploymentequilibriumTheaggregatedemandcurveshowsexpenditurebyconsumers(C),business(I),thegovernment(G),andforeignpurchasesofexports–domesticpurchasesofimports(X–M)atvariouspricelevelsCopyright?2011PearsonAddison-Wesley.Allrightsreserved.11-6
Copyright?2011PearsonAddison-Wesley.Allrightsreserved.11-7FIGURE11.1
AggregateDemand(AD)and
AggregateSupply(AS)
Copyright?2011PearsonAd
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