2003-6-22 1
Chapter 1:A Tour of the World
1-1:The United States
1-2:The European Union
1-3:Japan and East Asia
1-4:China
1-5:The Core Content of Macroeconomics
1-6:Looking Ahead
2003-6-22 2
1-1:The United States
Is Unemployment Too Low?
? Is the Stock Market Too High?
Why Has Growth Slowed Down?
Why Has Wage Inequality Increased?
2003-6-22 3
How to Look at an economy
When we Look at an economy,macroeconomists
focus on first three measures,
● Output,the level of production of the
economy as a whole,and its rate of growth
● The unemployment rate,the proportion of
workers in the economy who are not employed and
are looking for a job.
● The inflation rate,the rate at which the
average price of the goods in the economy is
increasing over time,
2003-6-22 4
Growth,Unemployment,and Inflation
in the United State,1960-1999
(in percent) 1960-
1998
1997 1998 1999 2000 2001 2002
Output growth
rate
3.1 3.9 3.9 3.6 3.3 0.3 2.9
Unemployment
rate
6.0 4.9 4.6 4.2 4.0 4.8 5.8
Inflation rate 4.0 1.9 1.0 1.1 1.9 1.4 1.0
2003-6-22 5
1-2:The European Union
How to Reduce High Unemployment?
What Will the Euro Do for Europe?
2003-6-22 6
Growth,Unemployment,and Inflation in
the European Union,1960-1999
(in percent) 1960-
1998
1997 1998 1999
Output growth rate 3.1 2.7 2.8 1.9
Unemployment rate 6.4 11.2 10.5 10.1
Inflation rate 5.7 1.8 1.8 1.7
2003-6-22 7
1-3:Japan and East Asia 1
What Has Japan Done So Poorly in
the 1990s?
What Was the Cause of the Asian
Crisis of 1997?
2003-6-22 8
Growth,Unemployment,and
Inflation in Japan,1960-1999
(in percent) 1960-
1997
1997 1998 1999
Output growth rate 5.8 0.8 -2.8 -0.9
Unemployment rate 1.9 3.4 4.1 4.9
Inflation rate 4.8 0.6 0.4 -0.7
2003-6-22 9
Output Growth in East Asian
Countries and Districts,1970-1999
(in percent) 1970-1997 1997 1998 1999
Hong Kong 7.5 5.2 -5.1 -1.3
Singapore 8.2 7.5 1.5 0.5
Korea 8.4 5.5 -5.5 2.0
Taiwan 8.3 6.8 4.9 3.9
Indonesia 6.8 4.7 -13.7 -4.0
Malaysia 7.4 7.8 -6.8 0.9
Philippines 3.6 5.1 -0.5 2.0
Thailand 7.5 -0.4 1.0 3.0
China 9.1 8.8 7.8 7.1
2003-6-22 10
1-4:China
GDP in China 1952-2002
GDP Growth Rate in China 1953-2002
Inflation Rate in China 1978-2002
The Sum of Trade and Proportion in GDP
2003-6-22 11
Appendix,GDP in China 1952-2002
Year GDP Year GDP Year GDP Year GDP
1952 679 1965 1716.1 1978 3624.1 1991 21617.8
1953 824 1966 1868 1979 4038.2 1992 26638.1
1954 859 1967 1773.9 1980 4517.8 1993 34634.4
1955 910 1968 1723.1 1981 4826.4 1994 46759.4
1956 1028 1969 1937.9 1982 5294.7 1995 58478.1
1957 1068 1970 2252.7 1983 5934.5 1996 67884.6
1958 1307 1971 2426.4 1984 7171 1997 74462.6
1959 1439 1972 2518.1 1985 8964.4 1998 78345.2
1960 1457 1973 2720.9 1986 10202.2 1999 81910.9
1961 1220 1974 2789.9 1987 11962.5 2000 88246.8
1962 1149.3 1975 2997.3 1988 14928.3 2001 95933
1963 1233.3 1976 2943.7 1989 16909.2 2002 102398
1964 1454 1977 3201.9 1990 18547.9 2003
2003-6-22 12
Figure:GDP in China 1952-2002
1952 679
1953 824
1954 859
1955 910
1956 1028
1957 1068
1958 1307
1959 1439
1960 1457
1961 1220
1962 1149.3
1963 1233.3
1964 1454
1965 1716.1
1966 1868
1967 1773.9
1968 1723.1
1969 1937.9
1970 2252.7
1971 2426.4
1972 2518.1
1973 2720.9
1974 2789.9
GDP in China 1952-2002
0
20000
40000
60000
80000
100000
120000
1
9
5
2
1
9
5
7
1
9
6
2
1
9
6
7
1
9
7
2
1
9
7
7
1
9
8
2
1
9
8
7
1
9
9
2
1
9
9
7
2
0
0
2
Year
GDP
系列1
2003-6-22 13
Appendix:GDP Growth Rate in China 1953-2002
Year growth rate Year growth rate Year growth rate Year growth rate
1952 1965 17 1978 11.7 1991 9.2
1953 11.5 1966 10.7 1979 7.6 1992 14.2
1954 4.2 1967 -5,7 1980 7.8 1993 13.5
1955 6.8 1968 -4.1 1981 5.2 1994 12.6
1956 15 1969 16.9 1982 9.1 1995 10.5
1957 5.1 1970 19.4 1983 10.9 1996 9.6
1958 21.3 1971 7 1984 15.2 1997 8.8
1959 8.8 1972 3.8 1985 13.5 1998 7.8
1960 -0.3 1973 7.9 1986 8.8 1999 7.1
1961 -27.3 1974 2.3 1987 11.6 2000 8
1962 -5.6 1975 8.7 1988 11.3 2001 7.3
1963 10.2 1976 -1.6 1989 4.1 2002 8
1964 18.3 1977 7.6 1990 3.8 Average:7.9
2003-6-22 14
Figure:GDP Growth Rate in China 1953-2002
1953 11.5
1954 4.2
1955 6.8
1956 15
1957 5.1
1958 21.3
1959 8.8
1960 -0.3
1961 -27.3
1962 -5.6
1963 10.2
1964 18.3
1965 17
1966 10.7
1967 -5.7
1968 -4.1
1969 16.9
1970 19.4
1971 7
1972 3.8
1973 7.9
1974 2.3
GDP Growth Rate in China:1953-2002
-30
-20
-10
0
10
20
30
1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001
Year
GDP Growth Rate
系列1
2003-6-22 15
Appendix,Inflation Rate in China
1978-2002
Year Inflation
Rate
Year Inflation
Rate
Year Inflation
Rate
1978 0.7 1987 7.3 1996 6.1
1979 2 1988 18.5 1997 0.8
1980 6 1989 17.8 1998 -2.6
1981 2.4 1990 2.1 1999 -3
1982 1.9 1991 2.9 2000 -1.5
1983 1.5 1992 5.4 2001 -0.8
1984 2.8 1993 13.2 2002 -1.3
1985 8.8 1994 21.7 Average:5.34
1986 6 1995 14.8
2003-6-22 16
Figure,Inflation Rate in China
1978-2002
1978 0.7
1979 2
1980 6
1981 2.4
1982 1.9
1983 1.5
1984 2.8
1985 8.8
1986 6
1987 7.3
1988 18.5
1989 17.8
1990 2.1
1991 2.9
1992 5.4
1993 13.2
1994 21.7
1995 14.8
1996 6.1
Inflation Rate in China,1978-2002
-10
0
10
20
30
1
9
7
8
1
9
8
1
1
9
8
4
1
9
8
7
1
9
9
0
1
9
9
3
1
9
9
6
1
9
9
9
2
0
0
2
Year
Inflation Rate
2003-6-22 17
Appendix,The Sum of Trade and
Proportion in GDP
Year SUM
(RMB)
Proportion
In GDP(%)
Year SUM
(RMB)
Proportion
In GDP(%)
1978 355.0 9.8 1995 23499.9 40.2
1980 570.0 12.6 1996 24133.8 35.6
1985 2066.7 23.1 1997 26967.2 36.2
1990 5560.1 30.0 1998 26857.7 34.3
1991 7225.8 33.4 1999 26896.3 32.8
1992 9119.6 34.2 2000 35368.6 40.1
1993 11271.0 32.5 2001 38021.3 39.6
1994 20381.9 43.6 2002 46309.9 45.2
2003-6-22 18
1-5:The Core Content of
Macroeconomics
The long run economic growth
Business cycle
Unemployment
Inflation
International economic
The policy of macroeconomic economic
2003-6-22 19
The long run economic growth
To watch the world,we can discover that there are
a big different about citizen life in the different
nation,Explain it from macroeconomics,the basic
reason that the long run economic growth rate is
different in different country,
It goes without saying,the increasing of labor
forces is a headspring for the long run economic
growth,But the most important headspring for the
long run economic growth surely comes from the
improving of labor productivity,
Diagram:The economic growth track in the
United States since 1870
The change of the United States's labor
productivity since 1900
2003-6-22 22
Business cycle
It is impossible for any a country to keep a
changeless economic growth rate.
? Regarding the United States as the example:In 1929-1933
that the big depressed period,the output level descended
near 30%.In the period 1939-1944,because the United
States took part in the Second World War,and the output
almost turn over a times,After 1945,the economy of
United States run relatively steady,but still undergo
decline such as 1973-1975,1981-1982,1990-1991.
Macroeconomists use the term of business cycle to
describe this kind of sharp expand and contract in
short-term economic activities.
The output fluctuation in the United
States,1950-1990
2003-6-22 24
Unemployed
When economy undergo recession,the
unemployment rate will increase,The unemployment,
economic growth and business cycle all together
make up of the core content of macroeconomics
The change about the unemployment
rate in the United States,1890-1990
2003-6-22 26
Inflation
Inflation is a sustained rise in the general level
of prices,The inflation rate is the rate at which
the price level increases.
It is a important task for macroeconomics to
discuss about the cause of the inflation
emerge and the effect of inflation
2003-6-22 27
International economy
In the open economy,a country macroeconomic
surely be affected by the international economic
situation,For example,in the circumstance that
widespread foreign trade,inflation will be transmit
among the state-to-state.The trade surplus and
trade deficit will surely affect a country’s employ
situation and fiscal situation.
2003-6-22 28
Macroeconomic policy
It is very important to stabilify macroeconomic running
that a series of economic policy took by the
government,Among them,the most important policy
are fiscal policy and monetary policy.
? The fiscal policy be constituted by the government's tax
policy and expenditure policy
? The content of monetary policy is that a country how to
control and adjust the growth rate of money supply under the
National Central Bank's control,
A good or bad match for fiscal policy and monetary
policy will directly affect a country’s macroeconomic
running,Therefore the macroeconomic policy is also a
main content of macroeconomics.
2003-6-22 29
1-6:Looking Ahead 1
● What determines expansions and recessions? Why
has the Untied States had such a long expansions in
the 1990 s? What has been the role of monetary and fiscal
policy? How will the Euro affect monetary policy in Europe?
● What are the interactions between the stock market,the foreign
exchange market,and economic activity? Is the U.S,stock
market too high? Can the poor performance of Japan in the
1990s be attributed to the sharp decline in the Japanese stock
market in the early 1990s?
● Why is inflation so much lower in the 1990 s than in earlier
decades? What is so bad about inflation? Should countries aim
for zero inflation,as is now the case in Japan?
2003-6-22 30
1-4:Looking Ahead 2
● Could the current U.S.unemployment rate be too
low? Why is unemployment so high in Europe?
Why has the Japanese unemployment rate been
so low for so many years?
● Why do growth rates differ so much across
countries,even over long periods of time? Why
has Japan grown so much faster than the United
States and Europe over the last 40 years?What
are the factors behind the Asian miracle?Why has
growth slowed down since the mid-1970s in most
rich countries?
Chapter 1:A Tour of the World
1-1:The United States
1-2:The European Union
1-3:Japan and East Asia
1-4:China
1-5:The Core Content of Macroeconomics
1-6:Looking Ahead
2003-6-22 2
1-1:The United States
Is Unemployment Too Low?
? Is the Stock Market Too High?
Why Has Growth Slowed Down?
Why Has Wage Inequality Increased?
2003-6-22 3
How to Look at an economy
When we Look at an economy,macroeconomists
focus on first three measures,
● Output,the level of production of the
economy as a whole,and its rate of growth
● The unemployment rate,the proportion of
workers in the economy who are not employed and
are looking for a job.
● The inflation rate,the rate at which the
average price of the goods in the economy is
increasing over time,
2003-6-22 4
Growth,Unemployment,and Inflation
in the United State,1960-1999
(in percent) 1960-
1998
1997 1998 1999 2000 2001 2002
Output growth
rate
3.1 3.9 3.9 3.6 3.3 0.3 2.9
Unemployment
rate
6.0 4.9 4.6 4.2 4.0 4.8 5.8
Inflation rate 4.0 1.9 1.0 1.1 1.9 1.4 1.0
2003-6-22 5
1-2:The European Union
How to Reduce High Unemployment?
What Will the Euro Do for Europe?
2003-6-22 6
Growth,Unemployment,and Inflation in
the European Union,1960-1999
(in percent) 1960-
1998
1997 1998 1999
Output growth rate 3.1 2.7 2.8 1.9
Unemployment rate 6.4 11.2 10.5 10.1
Inflation rate 5.7 1.8 1.8 1.7
2003-6-22 7
1-3:Japan and East Asia 1
What Has Japan Done So Poorly in
the 1990s?
What Was the Cause of the Asian
Crisis of 1997?
2003-6-22 8
Growth,Unemployment,and
Inflation in Japan,1960-1999
(in percent) 1960-
1997
1997 1998 1999
Output growth rate 5.8 0.8 -2.8 -0.9
Unemployment rate 1.9 3.4 4.1 4.9
Inflation rate 4.8 0.6 0.4 -0.7
2003-6-22 9
Output Growth in East Asian
Countries and Districts,1970-1999
(in percent) 1970-1997 1997 1998 1999
Hong Kong 7.5 5.2 -5.1 -1.3
Singapore 8.2 7.5 1.5 0.5
Korea 8.4 5.5 -5.5 2.0
Taiwan 8.3 6.8 4.9 3.9
Indonesia 6.8 4.7 -13.7 -4.0
Malaysia 7.4 7.8 -6.8 0.9
Philippines 3.6 5.1 -0.5 2.0
Thailand 7.5 -0.4 1.0 3.0
China 9.1 8.8 7.8 7.1
2003-6-22 10
1-4:China
GDP in China 1952-2002
GDP Growth Rate in China 1953-2002
Inflation Rate in China 1978-2002
The Sum of Trade and Proportion in GDP
2003-6-22 11
Appendix,GDP in China 1952-2002
Year GDP Year GDP Year GDP Year GDP
1952 679 1965 1716.1 1978 3624.1 1991 21617.8
1953 824 1966 1868 1979 4038.2 1992 26638.1
1954 859 1967 1773.9 1980 4517.8 1993 34634.4
1955 910 1968 1723.1 1981 4826.4 1994 46759.4
1956 1028 1969 1937.9 1982 5294.7 1995 58478.1
1957 1068 1970 2252.7 1983 5934.5 1996 67884.6
1958 1307 1971 2426.4 1984 7171 1997 74462.6
1959 1439 1972 2518.1 1985 8964.4 1998 78345.2
1960 1457 1973 2720.9 1986 10202.2 1999 81910.9
1961 1220 1974 2789.9 1987 11962.5 2000 88246.8
1962 1149.3 1975 2997.3 1988 14928.3 2001 95933
1963 1233.3 1976 2943.7 1989 16909.2 2002 102398
1964 1454 1977 3201.9 1990 18547.9 2003
2003-6-22 12
Figure:GDP in China 1952-2002
1952 679
1953 824
1954 859
1955 910
1956 1028
1957 1068
1958 1307
1959 1439
1960 1457
1961 1220
1962 1149.3
1963 1233.3
1964 1454
1965 1716.1
1966 1868
1967 1773.9
1968 1723.1
1969 1937.9
1970 2252.7
1971 2426.4
1972 2518.1
1973 2720.9
1974 2789.9
GDP in China 1952-2002
0
20000
40000
60000
80000
100000
120000
1
9
5
2
1
9
5
7
1
9
6
2
1
9
6
7
1
9
7
2
1
9
7
7
1
9
8
2
1
9
8
7
1
9
9
2
1
9
9
7
2
0
0
2
Year
GDP
系列1
2003-6-22 13
Appendix:GDP Growth Rate in China 1953-2002
Year growth rate Year growth rate Year growth rate Year growth rate
1952 1965 17 1978 11.7 1991 9.2
1953 11.5 1966 10.7 1979 7.6 1992 14.2
1954 4.2 1967 -5,7 1980 7.8 1993 13.5
1955 6.8 1968 -4.1 1981 5.2 1994 12.6
1956 15 1969 16.9 1982 9.1 1995 10.5
1957 5.1 1970 19.4 1983 10.9 1996 9.6
1958 21.3 1971 7 1984 15.2 1997 8.8
1959 8.8 1972 3.8 1985 13.5 1998 7.8
1960 -0.3 1973 7.9 1986 8.8 1999 7.1
1961 -27.3 1974 2.3 1987 11.6 2000 8
1962 -5.6 1975 8.7 1988 11.3 2001 7.3
1963 10.2 1976 -1.6 1989 4.1 2002 8
1964 18.3 1977 7.6 1990 3.8 Average:7.9
2003-6-22 14
Figure:GDP Growth Rate in China 1953-2002
1953 11.5
1954 4.2
1955 6.8
1956 15
1957 5.1
1958 21.3
1959 8.8
1960 -0.3
1961 -27.3
1962 -5.6
1963 10.2
1964 18.3
1965 17
1966 10.7
1967 -5.7
1968 -4.1
1969 16.9
1970 19.4
1971 7
1972 3.8
1973 7.9
1974 2.3
GDP Growth Rate in China:1953-2002
-30
-20
-10
0
10
20
30
1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001
Year
GDP Growth Rate
系列1
2003-6-22 15
Appendix,Inflation Rate in China
1978-2002
Year Inflation
Rate
Year Inflation
Rate
Year Inflation
Rate
1978 0.7 1987 7.3 1996 6.1
1979 2 1988 18.5 1997 0.8
1980 6 1989 17.8 1998 -2.6
1981 2.4 1990 2.1 1999 -3
1982 1.9 1991 2.9 2000 -1.5
1983 1.5 1992 5.4 2001 -0.8
1984 2.8 1993 13.2 2002 -1.3
1985 8.8 1994 21.7 Average:5.34
1986 6 1995 14.8
2003-6-22 16
Figure,Inflation Rate in China
1978-2002
1978 0.7
1979 2
1980 6
1981 2.4
1982 1.9
1983 1.5
1984 2.8
1985 8.8
1986 6
1987 7.3
1988 18.5
1989 17.8
1990 2.1
1991 2.9
1992 5.4
1993 13.2
1994 21.7
1995 14.8
1996 6.1
Inflation Rate in China,1978-2002
-10
0
10
20
30
1
9
7
8
1
9
8
1
1
9
8
4
1
9
8
7
1
9
9
0
1
9
9
3
1
9
9
6
1
9
9
9
2
0
0
2
Year
Inflation Rate
2003-6-22 17
Appendix,The Sum of Trade and
Proportion in GDP
Year SUM
(RMB)
Proportion
In GDP(%)
Year SUM
(RMB)
Proportion
In GDP(%)
1978 355.0 9.8 1995 23499.9 40.2
1980 570.0 12.6 1996 24133.8 35.6
1985 2066.7 23.1 1997 26967.2 36.2
1990 5560.1 30.0 1998 26857.7 34.3
1991 7225.8 33.4 1999 26896.3 32.8
1992 9119.6 34.2 2000 35368.6 40.1
1993 11271.0 32.5 2001 38021.3 39.6
1994 20381.9 43.6 2002 46309.9 45.2
2003-6-22 18
1-5:The Core Content of
Macroeconomics
The long run economic growth
Business cycle
Unemployment
Inflation
International economic
The policy of macroeconomic economic
2003-6-22 19
The long run economic growth
To watch the world,we can discover that there are
a big different about citizen life in the different
nation,Explain it from macroeconomics,the basic
reason that the long run economic growth rate is
different in different country,
It goes without saying,the increasing of labor
forces is a headspring for the long run economic
growth,But the most important headspring for the
long run economic growth surely comes from the
improving of labor productivity,
Diagram:The economic growth track in the
United States since 1870
The change of the United States's labor
productivity since 1900
2003-6-22 22
Business cycle
It is impossible for any a country to keep a
changeless economic growth rate.
? Regarding the United States as the example:In 1929-1933
that the big depressed period,the output level descended
near 30%.In the period 1939-1944,because the United
States took part in the Second World War,and the output
almost turn over a times,After 1945,the economy of
United States run relatively steady,but still undergo
decline such as 1973-1975,1981-1982,1990-1991.
Macroeconomists use the term of business cycle to
describe this kind of sharp expand and contract in
short-term economic activities.
The output fluctuation in the United
States,1950-1990
2003-6-22 24
Unemployed
When economy undergo recession,the
unemployment rate will increase,The unemployment,
economic growth and business cycle all together
make up of the core content of macroeconomics
The change about the unemployment
rate in the United States,1890-1990
2003-6-22 26
Inflation
Inflation is a sustained rise in the general level
of prices,The inflation rate is the rate at which
the price level increases.
It is a important task for macroeconomics to
discuss about the cause of the inflation
emerge and the effect of inflation
2003-6-22 27
International economy
In the open economy,a country macroeconomic
surely be affected by the international economic
situation,For example,in the circumstance that
widespread foreign trade,inflation will be transmit
among the state-to-state.The trade surplus and
trade deficit will surely affect a country’s employ
situation and fiscal situation.
2003-6-22 28
Macroeconomic policy
It is very important to stabilify macroeconomic running
that a series of economic policy took by the
government,Among them,the most important policy
are fiscal policy and monetary policy.
? The fiscal policy be constituted by the government's tax
policy and expenditure policy
? The content of monetary policy is that a country how to
control and adjust the growth rate of money supply under the
National Central Bank's control,
A good or bad match for fiscal policy and monetary
policy will directly affect a country’s macroeconomic
running,Therefore the macroeconomic policy is also a
main content of macroeconomics.
2003-6-22 29
1-6:Looking Ahead 1
● What determines expansions and recessions? Why
has the Untied States had such a long expansions in
the 1990 s? What has been the role of monetary and fiscal
policy? How will the Euro affect monetary policy in Europe?
● What are the interactions between the stock market,the foreign
exchange market,and economic activity? Is the U.S,stock
market too high? Can the poor performance of Japan in the
1990s be attributed to the sharp decline in the Japanese stock
market in the early 1990s?
● Why is inflation so much lower in the 1990 s than in earlier
decades? What is so bad about inflation? Should countries aim
for zero inflation,as is now the case in Japan?
2003-6-22 30
1-4:Looking Ahead 2
● Could the current U.S.unemployment rate be too
low? Why is unemployment so high in Europe?
Why has the Japanese unemployment rate been
so low for so many years?
● Why do growth rates differ so much across
countries,even over long periods of time? Why
has Japan grown so much faster than the United
States and Europe over the last 40 years?What
are the factors behind the Asian miracle?Why has
growth slowed down since the mid-1970s in most
rich countries?
