macroeconomics the study of the major economic totals, or aggregates, such as the nation’s output,...

MACROECONOMICS

The study of the major economic totals, or aggregates, such as the nation’s output, the national unemployment rate, or the general

price level.

What stimulated the development of Macroeconomics?

In the 1930s, two events sparked interest in Macroeconomics:

• The Great Depression of the 1930s; and

• The publication of The General Theory of Employment, Interest and Money by John Maynard Keynes in 1936.

Macroeconomic Policy

In the Employment Act of 1946, Congress declared “that it is the continuing policy and responsibility of the Federal Government to use all practicable means … to promote maximum employment….” More specific goals are listed in the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978.

Goals of Macroeconomic Policy

• Full Employment:– Unemployment rate of 4.0% (3.0% for adults)

• Price Stability:– No inflation or deflation

• Economic Growth:– Increases in society’s real output

• External Balance:– Exports = Imports