APMacro: Macroeconomy

GDP Intro

Macroeconomics is the study of the entire economy resulting from individual microeconomic decisions. Macroeconomics explores long-run economic growth, short-run business cycles, and theories about government intervention to stabilize markets.

Measures of economic performance serve as a foundation for the study of macroeconomics. Gross domestic product measures the value of all final goods and services produced in a country in one year. Unemployment occurs when a person is not working but is actively trying to find a job. Inflation is a general increase in the level of prices.

Economic growth is a primary goal of economic activity. Economic growth is measured as an increase in real GDP per capita, in order to correct for changes in population. Economic shocks play a role in economic performance. A positive supply shock can increase output and reduce the price level. A negative supply shock can reduce output and increase the price level. Most short-run fluctuations in GDP result from demand shocks.



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