When economists think about history, fluctuations often stand out--oil shocks an

ID: 1177901 • Letter: W

Question

When economists think about history, fluctuations often stand out--oil shocks and stagflation in the 1970s, a recession followed by a long expansion in the 1980s, a recession followed by an extraordinary low-unemployment, low-inflation boom in the 1990s.

Go the Web site of the Bureau of Economic Analysis (www.bea.gov) and retrieve the quarterly revision of NIPA Table 1.1.6, real GDP in chained (2005) dollars. Get real GDP for the fourth quarter of 1959, 1969, 1979, 1989, 1999, 2000, and 2010 as well as for the fourth quarter of the most recent year available.

Once this data is obtained, answer the following questions:

Using the real GDP numbers for 1959 and 1969, calculate the decadal growth rate of real GDP for the 1960s. Do the same for the 1970s, 1980s, 1990s, and the 2000s and for the available years of the most recent decade.

How does growth in the 1970s compare to growth in the later decades? How does growth in the 1960s compare to the later decades? Which decade looks most unusual?

Explanation / Answer

I would define macroeconomics similarly to how I defined it in What is Economics?. Macroeconomics examines the economy as a whole and answers questions such as 'What causes the economy to grow over time?', 'What causes short-run fluctuations in the economy?' 'What influences the values various economic indicators and how do those indicators affect economic performance?

Macroeconomics can be best understood in contrast to microeconomics which considers the decisions made at an individual or firm level. Macroeconomics considers the larger picture, or how all of these decisions sum together. An understanding of microeconomics is crucial to understand macroeconomics. To understand why a change in interest rates leads to changes in real GDP, we need to understand how lower interest rates influence decisions, such as the decision of how much to save, at the firm or household level. Once we understand how an individual, on average, will change their behavior we will then understand the large scale relationships in an economy.

Like most definitions in economics, there are various competing definitions of the term Macroeconomics. Browsing the web, we will find various answers to the question:

What is Macroeconomics? - How Others Define Macroeconomics

Perhaps the simplest answer to the question "What is Macroeconomics?" can be found at WordReference.com. They state that "Macroeconomics is the branch of economics concerned with aggregates, such as national income, consumption, and investment ".

The Economist's Dictionary of Economics defines Macroeconomics as "The study of whole economic systems aggregating over the functioning of individual economic units. It is primarily concerned with variables which follow systematic and predictable paths of behaviour and can be analysed independently of the decisions of the many agents who determine their level. More specifically, it is a study of national economies and the determination of national income."

Macroeconomics as the Economics in the Newspaper

The website Tutor2U answers the question "What is Macroeconomics" with the following response: "Macroeconomics considers the performance of the economy as a whole. Many macroeconomic issues appear in the press and on the evening news on a daily basis. When we study macroeconomics we are looking at topics such as economic growth; inflation; changes in employment and unemployment, our trade performance with other countries (i.e. the balance of payments) the relative success or failure of government economic policies and the decisions made by the Bank of England."

Navigate

When economists speak of demand, they are referring to: Answer A. the quantities

When economists think about history, fluctuations often stand out--oil shocks an

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

When economists think about history, fluctuations often stand out--oil shocks an

Question

Explanation / Answer

Related Questions

Navigate