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CHAPTER 11
INTRODUCTION TO MACROECONOMICS
2nd Semester, S.Y 2013 – 2014
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Macroeconomics
Macroeconomics looks at the overall performance
of the economy as a whole. Economy-wide
phenomena, including inflation, unemployment,
and economic growth .
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Scope of Macroeconomics
Macroeconomics studies
 Economic growth (GNP and GDP)
 Unemployment and inflation
 Aggregate demand and aggregate supply
 Economic policies – fiscal and monetary
 International trade – exports and imports
 Money supply
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Four Main Macroeconomic Goals
1. Maintain full employment.
2. Ensure Price stability. No inflation
3. High level of economic growth. Sustained
increase in GDP.
4. Favorable balance of trade. Exports exceed
imports.
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Four Sectors of the Economy
1. Household (Consumers)
 Consuming unit of the economy
2. Business Firms (Producers)

Producing unit of the economy
3. Government (Public sector)

Implementer of economic policies
4. Foreign Sector
 International trade and net exports
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
A Four-Sector Circular Flow Model
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Economic Roles of the Government
1.
2.
3.
4.
Allocative Role
Distributive Role
Regulatory Role
Stabilization Rule
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS
Economic Cycle
Business Cycle describes the fluctuations in the economy between growth
(expressed in rising real GDP) and stagnation (expressed in falling real GDP).
5 Phases of Business
Cycle
1.
2.
3.
4.
5.
Peak
Contraction
Trough
Recovery
Expansion
Pangasinan State University
Social Science Department – PSU Lingayen
BACHELOR OF ARTS IN ECONOMICS
ECON 111 – ECONOMIC ANALYSIS