In this lecture we introduce some of the main topics of macroeconomics: inflation, the output of the economy, and unemployment. We also look at some of the trends of the U.S. economy during the twentieth century. Upon completion of this lecture, you should understand and be able to answer these key questions:
1. When and how did modern macroeconomics begin? What were its early concerns?
2. What do economists mean by inflation? How do we know whether the economy is growing or not? What is unemployment?
3. What are the main tools that the government can use to influence the economy? What's the difference between fiscal policy, monetary policy, and supply-side economics?
4. How do expenditures by someone become income for someone else? How do the different markets in the economy interact?
5. What do we mean by "macroeconomic aggregates?" How do we aggregate across all goods and services, consumers, and producers?
6. What are some of the long-run trends of the U.S. economy in the twentieth century?