2.  Macro economics is the study of the behavior
of the economy as a whole. it examines the
forces that effect many firms ,consumers ,and
workers at the time.

3.  Micro economics studies individual prices,
quanities and markets

4.  Output
Two ways to measure GDP:
 Nominal GDP
measured in actual market prices
 Real GDP
calculated in constant and invariant prices.
Economic growth
Potential GDP
• It represents the maximum sustainable level of
output that the economy can produce.
• when an economy is operating at its potential there
are high levels of utilization of labour force and the capital
stock.

6. • Consumer price index
• The average price goods and services
bought by consumers.
• The overall price level is denoted by p
Economist measures price stability by
looking inflation rate.
• The inflation rate is the percentage change in
the overall level of prices From one year to
the next.

7.  A high and growing level of national output
 High employment with low unemployment
 A stable or gently rising price level.

8.  Fiscal policy
 Monetary policy

9.  Fiscal policy denotes the use of taxes and
government expenditures.
 Government expenditures come into two
distinct forms
 government purchases
 government transfer
 taxation

10.  The second major instrument of macro
economic policy is monetary policy, which
governments conducts through managing the
nations money, credit,and banking system

11.  Economic growth represents the expansion of
a country’s potential GDP
 The related concept is the growth rate of
output per person.
 Economic growth involves the growth of
potential output over the long run. the
growth in output per capita is an important
objective of government because it is
associated with raising average real incomes
and living standereds.

12.  Human resources.
 Natural resources
 Capital formation
 Technology.

13.  Economist write relationship in terms of an aggregate
production function,which relates total national
output to inputs and technology, the APF is
Q=AF(k,L.R)
q-output
k-productive services of capital
l-lobor inputs
R-natural resource inputs.
A-level of technology in the economy
F-production funtion