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Why should an MBA student, study Macroeconomics ? Why should an MBA student, study Macroeconomics ? Because you need to understand the national and international economic environment that you are functioning in. You need to know: Why should an MBA student, study Macroeconomics ? • your suppliers Why should an MBA student, study Macroeconomics ? • your suppliers • customers Why should an MBA student, study Macroeconomics ? • • your suppliers customers • competitors Why should an MBA student, study Macroeconomics ? • • • your suppliers customers competitors • legal system Why should an MBA student, study Macroeconomics ? • • • • your suppliers customers competitors legal system • regulations Why should an MBA student, study Macroeconomics ? • • • • • your suppliers customers competitors legal system regulations • how to interpret economic decisions made by the: Why should an MBA student, study Macroeconomics ? • • • • • your suppliers customers competitors legal system regulations • how to interpret economic decisions made by the: – congress, Why should an MBA student, study Macroeconomics ? • • • • • • your suppliers customers competitors legal system regulations how to interpret economic decisions made by the: – congress, – the president, and Why should an MBA student, study Macroeconomics ? • • • • • • your suppliers customers competitors legal system regulations how to interpret economic decisions made by the: – congress, – the president, and – the Federal reserve system Why should an MBA student, study Macroeconomics ? • • • • • • your suppliers customers competitors legal system regulations how to interpret economic decisions made by the: – congress, – the president, and – the Federal reserve system Why should an MBA student, study Macroeconomics ? • • • • • • your suppliers customers competitors legal system regulations interpret economic decisions made by the: – congress, – the president, and – the Federal reserve system • the overall health of the economy. What is macroeconomics ? macroeconomics is the study of the economy as a whole. What is macroeconomics ? macroeconomics is the study of the economy as a whole. study of It is the What is macroeconomics ? macroeconomics is the study of the economy as a whole. study of • total output It is the What is macroeconomics ? macroeconomics is the study of the economy as a whole. It is the study of • total output • growth rate of the GDP What is macroeconomics ? macroeconomics is the study of the economy as a whole. It is the study of • total output • growth rate of the GDP • inflation rate What is macroeconomics ? macroeconomics is the study of the economy as a whole. It is the study of • total output • growth rate of the GDP • inflation rate • unemployment rate What is macroeconomics ? macroeconomics is the study of the economy as a whole. It is the study of • total output • growth rate of the GDP • inflation rate • unemployment rate • foreign sector What is macroeconomics ? macroeconomics is the study of the economy as a whole. It is the study of • total output • growth rate of the GDP • inflation rate • unemployment rate • foreign sector • exchange rate Distinguishing Features of Macroeconomics ? • Data is aggregated to see the big picture rather than small economic units Distinguishing Features of Macroeconomics ? • Data is aggregated to see the big picture rather than small economic units • Role of money is of critical importance to understanding macroeconomics Macroeconomic Facts: The US 1-- Output and employment have been steadily increasing throughout the history Macroeconomic Facts: The US 2-- Unemployment Rate [The ratio of those who are unemployed and are interested in and are looking for gainful employment but do not have jobs to total labor force] varies for year to year. We are interested in learning: Macroeconomic Facts: The US 2-- Unemployment Rate [The ratio of those who are interested in gainful employment but do not have jobs to total labor force] varies for year to year. We are interested in leaning: – what determines the long run output and employment Macroeconomic Facts: The US • Unemployment Rate [The ratio of those who are interested in gainful employment but do not have jobs to total labor force] varies for year to year. We are interested in leaning: – what determines the long run output and employment – what causes year to year fluctuations in unemployment rates Macroeconomic Facts: The US 3-- Money growth and Inflation seems to be very closely move together, most of the time. Macroeconomic Facts: The US 4-- Balance of Trade [the difference between exports and imports] has been negative and rising. Does this mean that the rest of the world is more competitive or it has something to do with the US government budget deficits? More discussion in chapter 5. Macroeconomic Facts: The US 5-- Exchange Rates [value of one currency in terms of another] have been widely fluctuating. But an index of all exchange rates show Macroeconomic Facts: The US 5-- Exchange Rates [value of one currency in terms of another] have been widely fluctuating. But an index of all exchange rates show – a sharp rise in the first half of 1980s followed Macroeconomic Facts: The US 5-- Exchange Rates [value of one currency in terms of another] have been widely fluctuating. But an index of all exchange rates show – a sharp rise in the first half of 1980s followed – a sharp reversal in the rest of the period until Macroeconomic Facts: The US 5-- Exchange Rates [value of one currency in terms of another] have been widely fluctuating. But an index of all exchange rates show – a sharp rise in the first half of 1980s followed – a sharp reversal in the rest of the period until – a rise in the mid 1990s again. Key Economic Issues 1-- What factors influence long term growth Key Economic Issues 1-- What factors influence long term growth 2-- Why output and employment deviate from the long term trend Key Economic Issues 1-- What factors influence long term growth 2-- Why output and employment deviate from the long term trend 3-- Role of money in affecting output, prices, and employment Key Economic Issues 1-- What factors influence long term growth 2-- Why output and employment deviate from the long term trend 3-- Role of money in affecting output, prices, and employment 4-- What are proper role of macro policy Key Economic Issues 1-- What factors influence long term growth 2-- Why output and employment deviate from the long term trend 3-- Role of money in affecting output, prices, and employment 4-- What are proper role of macro policy 5-- The two way relationship between interdependence (Globalization), trade and exchange rates