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  • Print publication year: 2011
  • Online publication date: June 2012

1 - Macroeconomics and the Real World

from Part I - Introduction

Summary

The Problems of Macroeconomics

Perhaps the most direct way to understand what macroeconomics is about is to sample the typical problems that it addresses.

Nothing focuses the mind on the economy more readily than an economic crisis. And when most of us think about an economic crisis, it is the macroeconomic aspects of the economy that spring to mind. The U.S. economy entered a recession in December 2007. Between then and the beginning of the recovery in June 2009, gross domestic product (GDP) fell by 3.7 percent – the largest fall during a recession since the Great Depression of the 1930s. To put that in perspective, GDP per head fell by $2,981 – that is, if the GDP had been evenly distributed across every person in the United States, each would have lost nearly $3,000 per year or nearly $4,500 over the eighteen-month recession (i.e., a family of four would have lost $18,000).

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Suggestions for Further Reading
Carroll, Richard An Economic Record of Presidential Performance: From Truman to Bush Westport CT: Praeger 1995