PowerPoint Presentation by Charlie Cook Copyright © 2004 South-Western. All rights reserved.

Chapter 1The

Macroeconomy

Copyright © 2004 South-Western. All rights reserved. 1–2

Fundamental Issues

1. What is macroeconomics, and what are its distinguishing features?

2. What are key macroeconomic variables?3. What are the key issues in

macroeconomics?4. Why is macroeconomics a controversial

subject?

Copyright © 2004 South-Western. All rights reserved. 1–3 Figure 1–1

Output and Employment in the United States,1959–Present

Sources: Economic Report of the President, 2002; Economic Indicators (various issues).

Copyright © 2004 South-Western. All rights reserved. 1–4 Figure 1–2

U.S. Unemployment, 1959–Present

Sources: Economic Report of the President, 2002; Economic Indicators (various issues).

Copyright © 2004 South-Western. All rights reserved. 1–5 Figure 1–3

Annual Money Growth Rates and Inflation Ratesin the United States, 1960–Present

Sources: Economic Report of the President, 2002; Economic Indicators (various issues).

Copyright © 2004 South-Western. All rights reserved. 1–6 Figure 1–4

The U.S. Balance of Trade, 1949–Present

Sources: Economic Report of the President, 2002; Economic Indicators (various issues).

Copyright © 2004 South-Western. All rights reserved. 1–7Sources: Economic Report of the President, 2002; Federal Reserve Bulletin (various issues). Figure 1–5

The Changing Value of the Dollar

Copyright © 2004 South-Western. All rights reserved. 1–8Source: World Bank, World Development Indicators, 2003. Figure 1–6

Per Capita Output Comparisonsfor Selected Nations

Copyright © 2004 South-Western. All rights reserved. 1–9Source: International Monetary Fund, World Economic Outlook, April 2002. Figure 1–7

Output Growth Comparisons

Copyright © 2004 South-Western. All rights reserved. 1–10 Figure 1–8

Average Inflation Rates forSelected Nations and Regions of the World

Source: International Monetary Fund, World Economic Outlook, April 2002.

Copyright © 2004 South-Western. All rights reserved. 1–11

Sources: International Monetary Fund, World Economic Outlook, April 2002; Economic Report of the President, 2002; Economic Indicators (various issues). Figure 1–9

World Output and the Declining Predominance

of the United States

Worldreal GDP($ billions)

U.S. real GDPas percent ofworld real GDP

Copyright © 2004 South-Western. All rights reserved. 1–12Source: International Labor Organization. Figure 1–10

Annual Hours Worked Per Person in Selected Nations

Copyright © 2004 South-Western. All rights reserved. 1–13Source: Bureau of Economic Analysis. Figure 1–11

The Contribution of Health Care toU.S. Economic Activity and Employment

Output growth coming from

health care (percent)

Rate ofjob growth

(percent)

Copyright © 2004 South-Western. All rights reserved. 1–14

Source: Friedrich Schneider, “The Increase of the Size of the Shadow Economy of Eighteen OECD Countries:Some Preliminary Explanations,” CESifo Working Paper no. 306, June 2000.

Figure 1–12

The Relative Size of the Shadow Economy and the Total Tax and Social Security Burden

in Selected NationsShadow economy activity as a percentage of official economic activity

Shadow economy activity as a percentage of official economic activity