LECTURE # 01

REVISSION

MACRO ECONMICS OBJECTIVES

 Higher level of output
 To control inflation
 To reduce unemployment

Aggregate demand = Aggregate supply

C+I+G=C+S+T
 C = Consumption
 I = Investment
 G = Government spending
 S = Saving
 T = Tax

GDP : Gross domestic product ( C + I + G + NX)

GNP : Gross National product ( GDP – foreigners’ outflow + national inflow)
AD : Aggregate demand ( Demand of whole economy)
AS : Aggregate supply (Supply of whole economy)
NI : National income
INFLATION : Increase in prices.
DEFLATION: Decrease in prices

ECONOMIC GROWTH
An increase in the amount of goods and services produced per
head of the population over a period of time.

ECONOMIC DEVELOPMENT
 Long term phenomena
 Structural changes that impact economy
 EXAMPLE: Gwadar city, metro bus, motorway.

FATHER OF ECONOMICS: Adam smith

FATHER OF MACRO ECONOMICS: John Keynes

TYPES OF UNEMPLOYMENT
 Voluntary unemployment
 Involuntary unemployment
 Under unemployment

PHILIP CURVE
There is tradeoff between inflation and unemployment.

POLICIES
MONITORY POLICY
 Made by central bank
 Governor
 2 months
 Control money supply in economy
 Variables are interest and money supply

FISCAL POLICY
 Government
 Finance Minister
 One year
 Variables are Tax, government spending’s and development
expenses.