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Chapter 1: Thinking About Macroeconomics
Chapter Summary:
The chapter provides an overview of the important themes of the
textbook. It provides a brief description of the important economic aggregates in
the context of U.S. economic performance. Historical data on U.S. GDP,
business cycles, inflation, and unemployment are examined.
After inspecting the available data, the process for developing theories to
explain the data is described. The importance of modeling aggregate behavior
Chapter Outline:
I. Output, Employment, and Prices in U.S. History
II. Economic Models
A. Supply and Demand Analysis
Teaching Tips:
1. The chapter is motivational, so begin by telling students by discussing
expectations. What can they expect from you? What can they expect from the
book? What do you expect of them? Why study macro?
a. Use a concrete example to show that understanding the
b. Economic thinking is systemic thinking- changes in one variable have
repercussions throughout the system. In the previous example, consider how
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2. When it comes to supply and demand analysis, some students may be out of
practice. Consider augmenting the coffee market example with diagrams of real
world market developments using articles from the Wall Street Journal.