Macroeconomics
Chapter 1: A tour of the world
1.1 Europe and the Euro
Crisis 2008 t/m 2010: decline in the real GDP growth in all the economies, but in the
advanced economies the GDP growth rate turned negative.
When macroeconomists study an economy, they first look at three variables:
Output: level of production of the economy as a whole and its rate of growth
Unemployment rate: proportion of workers in the economy who are not
employed and are looking for a job
Inflation rate: rate at which the average price of the goods in the economy is
increasing over time
The economic performance of the European countries hasn’t been as good as it was
in the 1990s: they have had a lower average annual output growth, persistently high
unemployment and initial high inflation in central Europe (but this soon fell again).
Three main European issues in the economic debate:
High unemployment: Europe used to be the land of the unemployment
miracle, but this is gone. The unemployment rate in Europe is constantly
nearly 2 percentage points higher than the unemployment in the USA.
Growth of income per person/capita
Introduction of the common currency: the Euro. Supporters: the Euro is of
enormous symbolic importance; contributes to the creation of a huge
economic zone. Contradictors: symbolism of the Euro brought economic costs
because of the same interest rates across the euro countries; countries cannot
do what is best for themselves anymore.
Important benefit for countries that entered the euro with high public debt: sharp
reduction of interest rates. They have fallen so much because they reflect a countries
credibility to keep inflation low: European central bank has a better reputation.
Benefit: the cost of public debt is the interest rate that the state pays to holders of
public bonds cost of debt is lower.
1.2 The economic outlook in the USA
What are the reasons for the recent slowdown in the USA?
In 2007-2008, families in the USA were hit by four economic shocks which occurred
over a short period of time:
The increase in oil prices. If oil imports become more expensive, this means
that in order to import the same amount of oil, importing countries will have
Chapter 1: A tour of the world
1.1 Europe and the Euro
Crisis 2008 t/m 2010: decline in the real GDP growth in all the economies, but in the
advanced economies the GDP growth rate turned negative.
When macroeconomists study an economy, they first look at three variables:
Output: level of production of the economy as a whole and its rate of growth
Unemployment rate: proportion of workers in the economy who are not
employed and are looking for a job
Inflation rate: rate at which the average price of the goods in the economy is
increasing over time
The economic performance of the European countries hasn’t been as good as it was
in the 1990s: they have had a lower average annual output growth, persistently high
unemployment and initial high inflation in central Europe (but this soon fell again).
Three main European issues in the economic debate:
High unemployment: Europe used to be the land of the unemployment
miracle, but this is gone. The unemployment rate in Europe is constantly
nearly 2 percentage points higher than the unemployment in the USA.
Growth of income per person/capita
Introduction of the common currency: the Euro. Supporters: the Euro is of
enormous symbolic importance; contributes to the creation of a huge
economic zone. Contradictors: symbolism of the Euro brought economic costs
because of the same interest rates across the euro countries; countries cannot
do what is best for themselves anymore.
Important benefit for countries that entered the euro with high public debt: sharp
reduction of interest rates. They have fallen so much because they reflect a countries
credibility to keep inflation low: European central bank has a better reputation.
Benefit: the cost of public debt is the interest rate that the state pays to holders of
public bonds cost of debt is lower.
1.2 The economic outlook in the USA
What are the reasons for the recent slowdown in the USA?
In 2007-2008, families in the USA were hit by four economic shocks which occurred
over a short period of time:
The increase in oil prices. If oil imports become more expensive, this means
that in order to import the same amount of oil, importing countries will have
