What is macroeconomics? This lecture provides a comprehensive view of what macroeconomists study. The lecture consists of two parts: it starts with a macroeconomic tour of the world. The tour begins in Australia and then stops at each of the world’s major economic power: the United States, the Euro area and China. The purpose of the tour is to provide answers to the two major questions that macroeconomists ask when they first look at a country: How big is the country, from an economic perspective? And what is the living standard?
The second part of the lecture introduces the three central variables of macroeconomics: output (GDP), unemployment, and inflation. Particularly, the issues that we will address are: how do economists define output, the unemployment rate, and the inflation rate, and why do economists care about these variables? What factors affect output in the short run, the medium run, and long run?