Foundations of Economics, 8th Edition

Macroeconomic Approaches and Pathways

MyEconLab Concept Video

In the three previous chapters, you learned how economists define and measure real GDP, employment and unemployment, the price level, and the inflation rate—the key variables that describe macroeconomic performance. Your task in this chapter and those that follow is to learn the macroeconomic theory that explains macroeco­nomic performance and provides the basis for policies that might improve it.

The macroeconomic theory that we present is today’s consensus view on how the economy works. But it isn’t the view of all macroeconomists. Today’s con­sensus is a merger of three earlier schools of thought that have contrasting views about the causes of recessions and the best policies ...