ECON 2310 Intermediate Macroeconomics I

Introduction

Muhammad Irwan Ariffin

September 9, 2015

Muhammad Irwan Ariffin ECON 2310 Intermediate Macroeconomics I September 9, 2015 1/7
Outline

1 Introduction

2 Measurement of Macroeconomic Variables

The National Income Accounts
Measuring Changes

Muhammad Irwan Ariffin ECON 2310 Intermediate Macroeconomics I September 9, 2015 2/7
 Introduction

Introduction
Definition and Key Variables

Macroeconomics is...
The study of the behavior of the economy as a whole
The key variables studies in macroeconomics:
1 Total output level in the economy
2 Aggregate price level
3 (Un)Employment level
4 Interest rates level
5 Wage rates level
6 Foreign exchage rates level

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 Introduction

Introduction
Macroeconomics

A quick glance at Malaysia macroeoconomic data...

Annual percentage change in GDP
Unemployment rate
Inflation rate
Unemployment and inflation relationship
Government budget deficit

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 Introduction

Introduction

Four important macroeconomic questions:

1 Instability of Output
What determines the cyclical behavior of output and employment?
2 Movements in the Inflation Rate
What are the determinants of the rate of inflation?
What role do macroeconomic policies play in determining inflation?
3 The Output-Inflation Relationship
What relationship exists inflation and unemployment?
Why were both the unemployment rate and inflation rate so high
during much of the 1970s? What became of the negative relationship
that existed between these two variables in the 1950s and 1960s?
4 Growth Slowdown and Turnaround?
What determines the rate of growth in output over periods of one or
two decades? Over longer periods such as a century?
5 Implications of Deficits and Surpluses

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 Measurement of Macroeconomic Variables The National Income Accounts

The National Income Accounts

Gross Domestic Product

National Income
National income and output
Personal Income
Disposable Income

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 Measurement of Macroeconomic Variables Measuring Changes

Measuring Changes

Measuring price changes: real vs nominal GDP

Price index and GDP deflator
The Consumer Price Index and the Producer Price Index
Measures of Cyclical Variation in Output
Potential output
Monetary policy

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