Transcript of Macroeconomics
By: Emerald, Steven, and Noah Macroeconomics Global Economic Interdependence Everything depends on something Macroeconomics World Trade Balance of Trade Supply and Demand Measures of Economic Growth Gross Domestic Product (GDP) Macroeconomics has to do with the whole world's economy. Definition Macroeconomics has to do with the world's economy as a whole. It doesn't look at one part of the economy. It's the big idea. The alternate of macroeconomics is microeconomics, the small version of economics. More Information All of the stuff we're about to explain has to do with macroeconomics. Everything in macroeconomics ties back to one other. For example, global economic interdependence has to do with global economic interdependence. They can't make it efficiently so they have to trade with others, which is world trade. World trade has to do with the balance of trade, so they know how much they spent and how much they received. And all of this has to do with economic growth. It's all just a big circle. Macroeconomics vs. Microeconomics Macroeconomics and microeconomics both deal with economics, but they aren't the same. Macro has to deal with the economy as a whole, whereas micro has to deal with one company's economy. Macroeconomics is the "big idea" version in economics. When two countries trade something, that has to do with macro. Microeconomics is much smaller. Instead of managing the whole world's economy it deals with one company (McDonald's, Wal-Mart, etc.). Definition More Information History Global economic interdependence is a result of specialization (making something special for a certain reason). The people in the economic system are dependent on others for products they cannot make efficiently for themselves. In the economy, not everybody is successful in producing different products. We're dependent on each other. To explain better let me give you an example. If we worked on a farm we couldn't make every crop anytime we wanted, could we? We'd have to depend on the supermarket or other farmers to have food to eat. This shortage of supplies causes trading between different farms. The same thing happens in macroeconomics. We need help throughout the world. - Economic interdependence started as early as 4000 BC when people started trading livestock, tools, etc. - By the 1900s it was rare to find any country that was not influenced, or impacted, by foreign products. - People were able to have what they could not produce and were able to obtain goods from the other side of the world. But these amazing changes were interrupted by World War I in 1914-1918. - The economic growth of economic interdependence slowed into the Great Depression in the late 1920s. - Labor markets (the supply of available workers with the demand of them) were introduced to the world due to this growth. - Trading did not fully resume til the 1970s. - Today, we continue to grow through our advances in technology. The technology makes in easier to see what we can trade to different countries and it increases the growth. Macroeconomic History Everybody's experienced some kind of trade and you may have not even realized it. Definition World trade, or international trade, is the exchange of capital, goods, services all around the world. People trade different products to suffice their needs. Some of this trade can lead to GDP (Gross Domestic Product), which will be explained later. More Information Trade is very common. Pretend you had five Starbursts and your friend had seven Gummy Bears. Say your friend wanted one of your Starbursts and they said they'd give you two of their Gummy Bears for one. You give them a Starburst and they give you the Gummy Bears This is an example of an everyday trade. It doesn't just happen in economics, it's an every day thing. History - Records of trading go back to 19th century BC - Over the years there has been tremendous growth in trade. Lots of countries trade more and more items and lots more countries started trading. - In 1946, the Bretton Woods system went into effect. This helped with preventing wars and further depressions. - In later modern times, a bunch of different countries stared trading different products. For example, Grenada (an island in the Caribbean Sea) started being involved in spice trade. - In early modern times, there was much more trading recorded. Trades shifted to different places. Countries journeyed to other countries, which caused more trade between those countries. In 1592 Japan created a system to prevent smuggling and piracy (robbing). And so on. - In the middle ages, the trading remained around the same. There was little increase in trading. - In ancient times, there was a lot of different trading. People brought stuff to places and returned with gold, silver, ivory, silk, spices, etc. Do you want to waste money, or save it? Definition The balance of trade, also known as net exports, is the value of the imports of a country minus the exports over a certain amount of time. This determines the amount you spent during the year, showing whether you spent more than you made or made more then you spent. More Information In the world, we usually spend more than what we make, making our numbers negative, but not always. So let's say the United States gave out $5,000 in exports. This is the amount of money you gave. And let's say you had $7,000 in imports. This is the amount of money given to you. The balance of trade would be -$2,000. You owe money. The balance of trade averages how much you owe or how much extra you had. History - Balance of trade has grown and grown over the years. - The most growth happened in our century. Balance of trade became more popular because we did more trading and it caused more balances or unbalances. - Growth slowly increased later on. Balance of trade has to do a lot with trading and it emerged more and more throughout the years. - When balance of trade first began it had very slow growth. Over the first decade or so it averaged around the same amount. What do you know about supply and demand? Definition Supply and demand depends on how much you have to give and how much people want it. This can do with macroeconomics but usually goes back to microeconomics. In stores it's most popular and it's not usually viewed in the whole world's economy. More Information Supply and demand, like we said, has to do with how much someone wants something and how much of it you have. Like around Valentine's Day for example. The days before Valentine's Day the price for any of the items for this holiday cost more than usual. The demand has increased and the supply is decreasing due to the selling. Once the holiday was over, you probably saw a sale for all of these items. The demand has decreased and the supply has no shortage because there's no more demand for the item. History - In the fourteenth-century, several muslim scholars, understood to some extent on the concept of supply and demand. - The understanding of supply and demand became greater over time and we have a full understanding of it now. - Supply and demand wasn't called "supply and demand" until 1767 when James Denham-Steuart published "Inquiry into the Principles of Political Economy". - A full description of the topic wasn't really clear until 1691. When John Locke wrote "Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money". It gives a good understanding of the topic. What is "economic growth" anyways? Definition Economic growth is basically the measure of the increase of goods and services in a country. This measurement is called real gross domestic product. Economic growth also determines how much we've grown in our economics. More Information So like we've said, economic growth is measured in GDP. Let me give you an example of how to measure economic growth. Say the US received $9,000,000,000 in goods and services. Then the next year we make $9,090,000,000. We would have 1% of growth for that year. This is part of our growth. But not all growth will go up. We could just as easily receive less money for goods and services in the year, as well. History - The result of economic growth was, and still is, the developing of new products and services. - After 1973, growth slowed a bit in the western nations. They all slackened a bit after 1973. - There was also a mass production around the time of the Great Depression. Which created over-production. Following the Great Depression, there was demand for entirely new goods and services (ex. TV, radios, etc.) - The Industrial Revolution caused rapid economic growth. There was developing in new processes on how to make different items and a lot of new products were made. -When the Industrial Revolution started, it was from the excess of population and it made an escape for the Malthusian trap. But people that industrialized, had a slow in growth. - Before industrialization, there was an increase in population which was known as the Malthusian trap. The measurement of all our growth in the economy. What have you learned? 1. Q: What is macroeconomics? And what's the difference between macroeconomics and microeconomics? 1. A: Macroeconomics is the "big picture" of economics. It looks at the economy as a whole. The difference between the two is that macro is the big version and micro is the small. Definition History - Today we have better growth than we did, say, a hundred years ago. Our advances with technology and new products and systems has helped us in growth. - Not all economy growth has been a straight line towards to top of economy. Economy has slowed and speed up over the years. -In 1944 it became the main tool in measuring a country's economy. - Gross domestic product was first developed by Simon Kuznets in 1934. Gross domestic product, GDP for short, is the amount of goods and services produced in a year. It's the measurement of economic growth. And just about everything in economics has economic growth. More Information Gross domestic product is the consumption+ government spending+ investment+ net exports (balance of trade). Consumption meaning how much people buy it or obtain it. Government spending is the amount of money the government spends. Investment is putting into something, You're investing in that item. And net exports we've already gone over. So all this put together is the measurement of GDP 2. Q: In global economic interdependence, why are people dependent on one another? 2. A: Not everybody can produce what they need so they depend on others. 3. Q: Records of trading go back to __________.Full transcript
A. Ancient times
B. 10 years ago
C. The 19th century
D. 1944 3. Q: C. The 19th century 4. Q: What is the formula to determine the balance of trade?
A. Imports minus exports
B. Imports plus exports
C. Exports plus imports
D. Exports minus imports 4. A: D. Exports minus imports 5. Q: If the demand for supplies is high the price will ________.
(increase/decrease) 5. A: If the demand for supplies is high the price will ________. increase 6. Q: What measures economic growth?
A. A ruler
C. Balance of trade
D. Metric system 6. Q: B. GDP 7. Q: When was GDP first developed?
C. 14th century
D. A thousand years ago 7. A: A. 1934 Bibliography "Macro Vs. Micro Economics", Luke Bessey YouTube 1:04
"Macroeconomics: A Glorious History - WTO Bonus Project", rgvdmjr YouTube 4:28
"That's All Folks! (Best one on YouTube)", cumulo25 YouTube 0:08