Macroeconomics Class Lecture-1

Class Lecture-1

Macroeconomics in Business (Econ-1202)

Definition: Economics

1. Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

2. the study of how society manages its scarce resources

Scarcity:

1. The limited nature of society’s resources
2. Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have.
3. A situation of scarcity is one in which goods are limited relatives to desires.

Nature of economics: 2 types

1. Positive economics: it describes the facts of an economy.
2. Normative economics: it involves value judgments.

Branches of economics: 2

1. Microeconomics
2. Macroeconomics

Definition: Microeconomics

1. Microeconomics (from Greek prefix micro- meaning "small" + "economics") is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources.

2. It concerned with the behavior of individual entities such as markets, firms and households.

3. The study of how households and firms make decisions and how they interact in markets.

Founder: Adam Smith (1723 –1790), a Scottish social philosopher and a pioneer of political economy and Scottish Enlightenment.

Book: The Wealth of Nation (1776)

Definition: Macroeconomics

1. Macroeconomics (from Greek prefix "macro (o)-" meaning "large" + "economics") is a branch of economics dealing with the performance, structure, behavior, and decision-making of the entire economy. This includes a national, regional, or global economy.

2. It concerned with the overall performance of the economy.

3. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance.

4. The study of economy-wide phenomena, including inflation, unemployment, and economic growth.

Begun: 1860 (Early Period)

Early contributor: William Stanley Jevons (1835 –1882), a British economist and logician. Clément Juglar (1819 in Paris –1905 in Paris), a French doctor and statistician

Topics: apparent cycles of frequent, violent shifts in economic activity.

Modern Macroeconomics:

Begun: 1936

Main contributor: John Maynard Keynes (1883 –1946), a British economist

Book: The General Theory of Employment, Interest and Money (1936)

Name of renowned Macroeconomists:

Carl Menger, Alfred Marshall, Irving Fisher , John Maynard Keynes, Milton Friedman, Anna Schwartz,Neo-Keynesian Franco Modigliani, new Keynesian Stanley Fischer, new classical Edward C. Prescott

Attention: All class lecture available at: www.islamiceconomicsbd.blogspot.com