Robert_J._Barro_Macroeconomics_A_Modern_Approach_2007_SouthWestern_College_Pub

Chapter 1
Thinking about Macroeconomics
In macroeconomics, we study the overall or aggregate performance of an economy. A lot of our focus will be on an economy’s total output of goods and services, as measured by the real gross domestic product (GDP). We will study the breakdown of GDP into its major components: consumption, gross private domestic investment (purchases of new capital goods—equipment and structures—by the private sector), government consumption and investment, and net exports of goods and services. We also examine the aggregates of employment (persons with jobs) and unemployment (persons without jobs who are seeking work).
These terms refer to quantities of goods or labor. We are also interested in the
prices that correspond to these quantities. For example, we consider the dollar prices of the goods and services produced in an economy. When we look at the price of the typical or average item, we refer to the general price level. We also study the wage rate, which is the dollar price of labor; the rental price, which is the dollar price paid to use capital goods; and the interest rate, which determines the cost of borrowing and the return to lending. When we consider more than one economy, we can study the exchange rate, which is the rate at which one form of money (say the euro) exchanges for another form of money (say the U.S. dollar).

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