Economics: Theory and Practice, 10th Edition

CHAPTER 4

Goals and Problems of the Macroeconomy: Employment, Prices, and Production

CHAPTER OBJECTIVES

To introduce the three fundamental areas on which macroeconomics focuses: employment, prices, and production.

To introduce unemployment—its causes, consequences, and related data and concepts.

To discuss inflation—its causes, consequences, and measures.

To define full production and economic growth as well as contributing factors and associated costs.

To introduce GDP, the primary measure of production.

To define productivity and discuss changes in U.S. productivity over the years.

This chapter begins the section of the textbook devoted to macroeconomics, which is the study of the economy as a whole, or the “big picture.” Macroeconomics brings us such topics as aggregate (total) employment and production, unemployment, inflation, economic growth, money, and government stabilization policies. (Microeconomics, which focuses on decision making by individual units in the economy, is covered in Part 3 of this textbook.) The study of macroeconomics will help you to understand the roles the household, business, and government sectors play in the economy, and how the sectors relate to each other. We will also learn about problems that arise in the big picture economy and how those problems can be resolved.

Macroeconomics The study of the operation of the economy as a whole.

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