As an economic power, China has become increasingly preoccupied with its image around the world. According to BBC-GlobeScan, China enjoys a neutral to positive national image over the past 12 years, driven by the generally positive perception of the country’s economy. Interestingly, there is a strong divide between perception by developed and developing nations, with the former giving China a much lower rating than the latter. The USA in particular gives a consistently low rating, while sub-Saharan African countries give a consistently high rating. The chapter then reports two ad campaigns carried out by the Chinese government to promote the national image, especially in the USA. Results of public surveys show that, while there is some positive outcome, the public do not like the hard-sell approach. It is suggested that, in the future, national image campaigns should take a softer approach and be carried out by non-governmental organisations or private firms to reduce governmental involvement.

In this chapter, we turn to economic growth, meaning the long-run development of the economy over time. Previously, we have focused on the level of economic activity during a given period of time and on how that level is affected by changes in policies and other factors along with the price level, employment, and unemployment. Now we study how that level moves over long periods of time. Another way of saying this is that we are interested in the trend growth rate of economic activity.

In the previous chapters, we have discussed the short-run performance of the macroeconomy and the effects of monetary and fiscal policies in the short run. Now, we turn to the long run. This does not necessarily mean that we turn from monthly and quarterly time horizons to several years, although that is often the case. In the context of economic policies, short and long run are analytical concepts with no fixed analogy in time. The long run is the time horizon over which firms can vary all those things that lead to fixed costs in the short run, such as their stocks of capital, the location of their activities, and their production technologies. The long run is also the time horizon over which wages fully adjust to price level movements.

This chapter is all about a nation’s macroeconomy – it introduces the key concepts and indicators business managers, policymakers, and analysts look at and talk about when they describe the state of a nation’s economy and diagnose whether or not it is healthy, provides new business opportunities, or needs some policy intervention for improvement. To understand the macroeconomic environment you and your business operate in, you want to know the relevant terms, understand the concepts, and know what indicators to look at.

Macroeconomic policy debates tend to focus on aggregate demand. When output is considered too low or unemployment is rising, policymakers, the media, and the public call on the Fed to cut interest rates or on the federal government to provide stimulus. When inflation is going up, the Fed is told to put it under control. We want fast solutions and the way to get them is by managing aggregate demand. Therefore, most of this book is devoted to aggregate demand.

Economics is all about supply and demand. If the demand for Jack Daniel’s rises relative to supply, we predict that the price of Jack Daniel’s will rise and its quantity sold in the market will increase. Supply and demand, therefore, are common tools in the economist’s toolbox. This tool allows us to analyze why prices and quantities change and to think of both the reasons for these changes and what policies might be used to combat them if deemed necessary.