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Welcome to MacroLand! I will be giving you a tour of our wonderful

 land today. My name is Czar Nicolaus Frederick III, but my friends 

call me Freddy. This is my right hand man, Steve. Today we will show 

you how the good people of MacroLand track the economy, and why 

we have become one of the most prosperous realms in the world!

Here we are in the forest of MacroLand with Chuck the Monkey and 

Glenda the Witch to talk about one way we measure the economy of 

MacroLand: GDP, or the total value of all finished products made in 

MacroLand each year. This includes the number of apples Chuck grows, 

how many brooms Glenda makes, and much, much, more. How much we 

produce is worth is calculated by adding private consumption, gross 

investment, government spending, and the difference of exports and 

imports together. Nominal GDP is merely the monetary value of 

production for the year. Real GDP, however accounts for inflation when 

calculating GDP by dividing Nominal GDP by the rate of inflation plus 

100%. 

We are visiting Scurvy Bob and his crew, who transport much of the 

goods we produce here in MacroLand. Because he works with both 

producers and consumers, he sees both sides of Supply and Demand. In 

MacroLand, as prices decrease, people plan to purchase more, thus, 

Aggregate Demand and GDP increases as prices decrease. This price 

decrease is not on one specific good, but on the overall economy. 

Moreover, Aggregate Supply will increase as more resources become 

available, but in the long run, the AS graph will hit a vertical asymptote 

at the real GDP, meaning that in the long run, supply is not actually 

affected by pricing.

We are here in the mountains of MacroLand with Sir Galahad and his old 

nemesis, Nessi, to discuss inflation. Inflation is an overall rise in prices, 

which is usually classified as either cost push, where a rise in production 

costs causes a price increase, or demand-pull, where an increase in 

demand causes prices to rise. Nessi here is struggling to keep up with 

inflation, as much of the treasure he has hoarded over the years has not 

retained its value, and no longer has as much buying power as it did when 

he first stole it from the dwarves. Two of the ways we track inflation are 

the Consumer and Producer Price Indices, which measure the price changes 

for both consumers and producers over time by taking samples of the 

prices of a variety of different products.

We have entered into the province of Mordor to discuss unemployment. 

The unemployment rate is used to measure the strength of the economy, 

and is defined as the percent of the labor force (those sixteen years and 

older willing and able to work) that is currently unemployed. Zargulg and 

Xorakk have been out of work since the Dark Lord Sauron was 

overthrown last year, and because they only know how to fight and be 

scary, they have been facing structural unemployment, as there are few 

jobs that still require pillaging and preying on the innocent. However, we 

hope to help them find jobs at the haunted house during the state fair, but 

this would only be a temporary fix, and they would have to deal with 

seasonal unemployment, only being able to work during the fall.

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