University of Balamand

Faculty of Business & Management

Survey of Economics

Macroeconomics: Introductory Notes

 Macroeconomics is the study of the behavior of the economy as a whole. It examines

the overall level of a nation’s output, employment and prices.
By contrast, microeconomics studies individual prices, quantities and markets.
John Maynard Keynes is the father of Macroeconomics.

 Main concerns of Macro:

1. Why do output and employment sometimes fall, and how can unemployment
be reduced?
One key goal of Macro is to use monetary and fiscal policies to reduce the
severity of business-cycle downturns and unemployment.

2. What are the sources of price inflation and how can it be kept under control?
Macro policy has increasingly emphasized price stability as a key goal.
People get confused in times of high inflation  they make mistakes and
spend much of their time worrying about inflation eating away their incomes.
Hence, rapid price changes lead to economic inefficiency.

3. How can a nation increase its rate of economic growth? Macro is concerned
with the long run property of a country.

There are always tradeoffs among these 3 goals. There is no simple formula for
resolving these dilemmas, macroeconomists differ greatly on the proper approach
to take when confronted with high inflation, rising unemployment or stagnant
growth.

 The 3 basic measures of macroeconomic performance are:

- Output growth
- Unemployment rate
- Inflation rate
These measures give an idea about the economy. If there is something wrong  apply
fiscal and monetary policies.
This process is dynamic and never static.