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ECON 103 Principles of Macroeconomics Instructor: Bernard Malamud Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 Email: [email protected] Website: www.unlv.edu/faculty/bmalamud Office hours: MTWThF 11:30-12:30 pm ; a nd by appointment. Gauging Your Opinions – I - PowerPoint PPT Presentation
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ECON 103Principles of Macroeconomics
Instructor: Bernard Malamud–Office: BEH 502
Phone (702) 895 –3294Fax: 895 – 1354
»Email: [email protected]: www.unlv.edu/faculty/bmalamudOffice hours: MTWThF 11:30-12:30 pm; and by appointment
Gauging Your Opinions – I
The U.S. government is bankrupt ... or soon will be bankrupt.a) True b) False
I expect to receive Social Security benefits when I retire.b) Yes b) No
The US unemployment rate as officially measured is usually arounda) 2% b) 5% c) 8% d) 10%
The US unemployment rate as officially measured is now arounda) 2% b) 5% c) 8% d) 10%
The US unemployment rate is probably greater than/less than the rate that is officially measured.
a) greater than b) less than
Macro Objectives• Talk’n’ Economics
– Vocabulary: GDP, Unemployment, Inflation, Debt, Supply, Demand…and much, much more
• Economic Facts– Descriptions of the US and world economies
• Economic Models– Simplifying a complex reality
• Economic Policy Analysis– Laissez – faire vs. activism
The Economic Way of ThinkingFrom micro: Incentives matter!
The Macroeconomy
Macro Concerns• Jobs• Growth• Price Stability• Government Budget• Balance of Payments• Exchange Value of Dollar
Macro Pictures: Jobs
Macro Facts: Growth, Recession and Slump
The LongSlump
The LongSlump
Deviation of Actual from Potential GDP(Fraction of Potential)
Macro Pictures: Unemployment
Great Moderation
Inflation Rates: CPI and Core CPI
CRISIS
Monetary Policy and Interest Rates
London Interbank Offer Rate (LIBOR)
Federal Funds Rate
Macro Pictures: Exchange Rate
What We’ll Cover• Macro measurement:
• output, income, employment, prices, inflation, interest rates
• Aggregate demand: • C,I,G,NX … what’s bought• Money … what’s spent• Demand-side policies
• Aggregate supply:• Short-run responses to prices• Adjustment to long-run output potential
• Policy Debates• Economic Growth
Remember the Numbers?The US unemployment rate as officially measured is now around
a) 2% b) 5% c) 8% d) 10%
The US inflation rate is now arounda) 2% b) 5% c) 8% d) 10%
The US balance of trade in goods and services isa) positive b) negative c) balanced...it has to balance
Micro Foundations: A Brief Review Production Possibilities Frontier
Quantity ofComputersProduced
Quantity ofCars Produced
A
0
B Feasible but Inefficient
CD
ProductionPossibilitiesFrontier
EfficientPoints
Micro Foundations: Macro Application Production Possibilities FrontierPrivate SectorOutput
GovernmentPurchases
A
0
B Feasible but Inefficient
CD
ProductionPossibilitiesFrontier
EfficientPoints
When economy is at full employment (C), an increase in bovernment purchases raises prices and “crowds out” private activity
Micro Foundations: Macro Application Production Possibilities FrontierPrivate SectorOutput
GovernmentPurchases
A
0
B Feasible but Inefficient
CD
ProductionPossibilitiesFrontier
EfficientPoints
When economy is at less than full employment (B) , an increase in government purchases increases incomes and spurs additionalprivate sector activity as well (multiplier effect)
Supply
Demand
Price of Ice-Cream Cone
Quantity of Ice-Cream Cones
Micro Foundations: A Brief ReviewSupply and Demand
21 3 4 5 6 7 8 9 10 12110
$3.002.502.001.501.000.50
Equilibrium
AS
AD
Price Index
Real GDP
Macroeconomics: Aggregate Demand and Aggregate Supply
21 3 4 5 6 7 8 9 10 12110
3.002.502.001.501.000.50
PotentialRealGDP
