Definitions of Macroeconomics
• Macroeconomics is the study of the economy as a whole.
• It is concerned with the behavior of the entire economy.
• It includes the following: 1) analysis of economic
aggregates such as national income and output
2) total employment 3) general price level 4) foreign trade
A macroeconomy is said to be in equilibrium if total supply and total demand of goods and services are equal.
Total or Aggregate Supply is the amount of goods and services
produced in a given period of time.
Total or Aggregate Demand includes expenditure incurred by
various segments of the economy, the household, business,
government, and foreign sectors.
Full employmentRapid Economic GrowthPrice StabilityExternal Balance
Types of Unemployment
Cyclical unemploymentStructural unemploymentSeasonal unemploymentFrictional unemployment
Effects of Unemployment
• Decrease in national output• Decline in aggregate demand• Loss of skills• High crime rate• Low morale• Poor nutrition
• refers to a continuous increase in price
• refers to the rise in the level of prices, in general
Inflation rate -is the general rate in the rise
Hyperinflation -too high rate of inflation
Theories and Causes of Inflation
• Demand-pull inflation
• Cost-push inflation 1) wage-push theory
2) supply-shock theory
Effects of Inflation
Inflation reduces the purchasing power of money.People will be discouraged or unable to save.Inflation may lead to inflationary spiralEconomic collapseBenefits for businessmen
• refers to the fall in the average level of prices in the economy
• refers to some reduction in the level of economic activity
• used to lower inflation• refers to continuous decrease in
• Trade imbalance occurs if export earning are not enough to pay importations (trade deficit) or if export exceed import (trade surplus).
• Very important feature in a money economy.
• the money put aside for future use
Using one’s saving (substantial saving) to earn profit.
Where to Invest
Bank AccountsTreasury Bills (T-Bills)Mutual FundsCommoditiesReal Estate
Measures of National Output and Income
Joebert F. Padata Jr.Economics Student (S.Y. 2009-2010)