0x611 Macroeconomics

Summary of Mankiw’s Macroeconomics

Introduction

How Economists Think

Economists use models to understand the world with two types of variables: exogenous variables (features in ML), endogenous variables (targets in ML)

The Data of Macroeconomics

GDP

GDP (Gross Domestic Product) can be viewed as

  • Total income of everyone in the economy
  • Total expenditure on the economy’s output of goods and services

GDP Deflator is defined as

$$\text{GDP Deflator} = \frac{\text{Nominal GDP}}{\text{Real GDP}}$$

Inflation

There are a couple of statistics related to inflation.

Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services

Note: According to official website, the CPI’s basket is determined based on actual expenditure information from families and individuals.

Here is an example of how items in the basket impact the overall CPI

Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors

Unemployment Rate

Classical Theory: The Economy in The Long Run

Growth Theory: The Economy in the Very Long Run

Business Cycle Theory: The Economy in the Short Run