A Concise Guide to Macroeconomics: What Managers, Executives, and Students Need to Know
David A. Moss
This book is destined to become a staple in MBA courses—as well as the go-to resource for executives and managers at all levels seeking to brush up on their knowledge of macroeconomic dynamics.
expenditure (uses of output) Private and government consumption Private and government investment Total Share of GDP (%) 84 19 ¬ 103 Sources of investment 16 3 19 Domestic savings Net borrowing from abroad Total Expenditure versus output Total domestic expenditure Total domestic output (GDP) Difference (= net borrowing from abroad) 103 100 ® 3 Source: Bureau of Economic Analysis, US Department of Commerce. Note: In the United States in 2012, domestic expenditures (uses of output) exceeded
deflation. Some economists view wage stickiness as a cause of unemployment during periods of deflation (falling prices). If workers refused to accept smaller nominal wages during such periods (potentially as a result of money illusion), their real wages would rise rapidly as prices fell. Eventually, their real wages would reach a level that their employers simply could no longer afford to pay, 54 Money and the workers would be laid off. If only the workers had focused on maintaining their
output (goods and services) that a country produces constitutes its ultimate budget constraint. A country can use more output than it produces only if it borrows the difference from foreigners. Large volumes of output—not large quantities of money—are what make nations prosperous. A national government could print and distribute all the money it wanted, turning all of its residents into millionaires. But collectively they would be no better off than before unless national output increased as
essentially to zero, and to engage in nontraditional 150 −9.3 −8.9 −7.1 −4.3 2010 2011 2012 2013 0.07 0.09 0.04 0.13 0.05 0.14 3.06 5.17 Federal funds rate (%)a 4,033 2,926 2,926 2,421 2,234 2,240 891 871 Total assets of the Federal Reserve ($ billions)a 5 11 31 80 1,227 515 2 0 Total deposits of failed or assisted banks ($ billions)b 1.9 2.8 1.8 2.5 −2.8 −0.3 1.8 2.7 Real GDP growth (annual % change)b 6.7 7.9 8.5 9.4 9.9 7.3 5.0 4.4
government. Currency is said to be “in circulation” when it is held outside of a bank vault. The term “currency” may also be used to refer to a national unit of account—such as the US dollar or the Mexican peso. current account A major item on the balance of payments that records a c ountry’s international transactions for current use, including net exports of goods and services, net income, and net transfers. (Note, in the International Monetary Fund’s revised presentation of balance of