The Study of Macroeconomics

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• Micro vs. Macro • Microeconomics – the study of how individual households and firms make decisions and how they interact with one another in markets. • Macroeconomics – the study of the economy as a whole. – Its goal is to explain the economic changes that affect many households, firms, and markets at once. • The Two Groups of Economists • Macroeconomists • Focus on the economy as a whole. • Spend much time analyzing how total income changes and how changes in income cause changes in other modes of economic behavior. • Microeconomists • Focus on the markets for individual commodities and on the decisions of single economic agents. • Hold total income constant. • The Two Groups of Economists • Macroeconomists • Spend…show more content…
• The Great Depression in the 1930s • “America 's "Great Depression" began with the dramatic crash of the stock market on "Black Thursday", October 24, 1929 when 16 million shares of stock were quickly sold by panicking investors who had lost faith in the American economy. At the height of the Depression in 1933, nearly 25% of the Nation 's total work force, 12,830,000 people, were unemployed.” • “Wage income for workers who were lucky enough to have kept their jobs fell almost 43% between 1929 and 1933. It was the worst economic disaster in American history. Farm prices fell so drastically that many farmers lost their homes and land. Many went hungry.” • JOHN MAYNARD KEYNES The General Theory of Employment, Interest and Money  argued that it is possible for high unemployment and underutilized capacity to persist in market economies  argued that government fiscal and monetary policies can affect output and thereby reduce unemployment and shorten economic downturns • Measuring a Nation’s Income • Measuring a Nation’s Income • Microeconomics • Microeconomics is the study
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