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