SEMESTER 2 PORFOLIO<br />Sonny Bautista<br />
Macroeconomic Models<br />Economic growth and development<br />Full employment<br />Price stability<br />
Circular Flow of income<br />A simplified model of the economy that shows the flow of money through the economy<br />  S  ...
Gross Domestic Product<br />The total money value of all final goods and services produced in an economy in one year<br />...
Boom and Bust Cycle (Business cycle)<br />In developed economies, we often see a cyclical pattern to growth in real GDP, f...
factors of GDP<br />C + I + G + (X – M)<br />Private Consumption: The value of goods and services acquired and consumed by...
Demand-Side Policy: Fiscal<br />Fiscal Policy: The use of government spending and taxation to influence AD, raise revnue, ...
Demand-Side Policy: Monetary<br />Monetary Policy: the use of the rate of interest predominantly to influence AD (the mone...
Supply-side Policies<br />Aim: To increase economy’s productive potential <br />Increasing labour mobility<br />Increasing...
Unemployed<br />Unemployed: People who are registered as willing, able and available for work at the market clearing wage,...
Cost of unemployment<br />Loss of output<br />Waste of productive potential<br />Government finances<br />Social problems<...
Involuntary Unemployment<br />People fired involuntarily from jobs<br />Article: http://www.floridatoday.com/article/20110...
Cures for Involuntary Unemployment <br />Fiscal Policy<br />Cut Taxes<br />Increase government spending<br />Monetary Poli...
Supply-Demand Work-Force Diagram<br />AS labour<br />Real Wage<br />Labour Force<br />W1<br />AD labour<br />L1 L2<br />L...
Inflation<br />A constant rise in prices over a given time period<br />Costs of Inflation:<br />Redistribution of income<b...
Cost-Push Inflation<br />Cost-Push Inflation: When there is an increase in the costs of factors of production, such as wag...
Demand-pull Inflation<br />An increase in AD, caused by a sustained increase in any of the components of AD will shift the...
Inflation/Unemployment Trade-off <br />Stagflation: with a standard se tof AD and AS curves, there is an inverse relations...
Stagflation<br />Stagflation: <br />A persistent high inflation combined with a high unemployment and stagnant demand in a...
Viewpoints: Monetarist<br />Beliefs:<br />Markets work<br />Economies tend towards full employment<br />Inflation is cause...
Monetarist AS curve<br />LRAS<br />Price level<br />SRAS<br />AD will be purely inflationary in the long run, and so polic...
Viewpoint: Keynesian<br />Beliefs: <br />Markets are slow to adjust (time lags)<br />An economy can be in equilibrium belo...
Keynesian AS curve<br />LRAS<br />Price level<br />SRAS<br />AD will increase output/income without increasing inflation a...
Upcoming SlideShare
Loading in …5
×

Portfolio2

1,024 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,024
On SlideShare
0
From Embeds
0
Number of Embeds
376
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Portfolio2

  1. 1. SEMESTER 2 PORFOLIO<br />Sonny Bautista<br />
  2. 2. Macroeconomic Models<br />Economic growth and development<br />Full employment<br />Price stability<br />
  3. 3. Circular Flow of income<br />A simplified model of the economy that shows the flow of money through the economy<br /> S M<br />House Holds<br />T<br />G<br />Government<br />Y<br />C<br />T<br />G<br />Firms<br />X I<br />S M<br />
  4. 4. Gross Domestic Product<br />The total money value of all final goods and services produced in an economy in one year<br />Real GDP: Adjusted for inflation<br />Nominal GDP: not adjusted for inflation<br />
  5. 5. Boom and Bust Cycle (Business cycle)<br />In developed economies, we often see a cyclical pattern to growth in real GDP, following four phases: boom, recession, trough, and recovery<br />BOOM<br />BOOM<br />RECESSION<br />RECOVERY<br />TROUGH<br />DEPRESSION<br />
  6. 6. factors of GDP<br />C + I + G + (X – M)<br />Private Consumption: The value of goods and services acquired and consumed by households<br />Government Expenditure:<br />The sum of government spending <br />Exports and Imports:<br />Represents gross exports and imports of an economy<br />Investments:<br /> Includes business investments on equipment <br />
  7. 7. Demand-Side Policy: Fiscal<br />Fiscal Policy: The use of government spending and taxation to influence AD, raise revnue, redistibute income and influence consumption patterns. <br />Problems: Time lags, financial inflexibility, budget deficits, and crowding out<br />
  8. 8. Demand-Side Policy: Monetary<br />Monetary Policy: the use of the rate of interest predominantly to influence AD (the money supply control can also be used)<br />Problems: Investment is interest inelastic, one policy fits all, disintermediation <br />
  9. 9. Supply-side Policies<br />Aim: To increase economy’s productive potential <br />Increasing labour mobility<br />Increasing incentives/decreasing disincentives to work<br />Increasing the productivity of labour<br />Increasing investment, innovation and enterprise<br />
  10. 10. Unemployed<br />Unemployed: People who are registered as willing, able and available for work at the market clearing wage, but who are unable to find work. <br />ARTICLE: http://www.bbc.co.uk/news/business-13568334<br /> Housing market fears due to unemployment <br />
  11. 11. Cost of unemployment<br />Loss of output<br />Waste of productive potential<br />Government finances<br />Social problems<br />Loss of consumer spending<br />
  12. 12. Involuntary Unemployment<br />People fired involuntarily from jobs<br />Article: http://www.floridatoday.com/article/20110528/BUSINESS/105280324/Engine-maker-lay-off-69<br />Engine markets lay-off 300 employers in florida<br />
  13. 13. Cures for Involuntary Unemployment <br />Fiscal Policy<br />Cut Taxes<br />Increase government spending<br />Monetary Policy<br />Reduce rate of interest<br />Increase money supply <br />
  14. 14. Supply-Demand Work-Force Diagram<br />AS labour<br />Real Wage<br />Labour Force<br />W1<br />AD labour<br />L1 L2<br />Labour<br />
  15. 15. Inflation<br />A constant rise in prices over a given time period<br />Costs of Inflation:<br />Redistribution of income<br />Devaluation of money<br />Reduction of investment<br />Reduction of international competitiveness<br />menu costs<br />
  16. 16. Cost-Push Inflation<br />Cost-Push Inflation: When there is an increase in the costs of factors of production, such as wage increases or increases in oil prices, then firms’ costs are pushed upwards, the SRAS curve shifts from SRAS1 to SRAS2, and the average price level rises from P1 to P2.<br />SRAS2 <br /> SRAS1<br />P2<br />P1<br />Average Price Level<br />Y2 Y1<br />GDP<br />
  17. 17. Demand-pull Inflation<br />An increase in AD, caused by a sustained increase in any of the components of AD will shift the AD curve from AD1 to AD2 and the average price level will rise from P1 to P2. <br />SRAS1<br />P2<br />P1<br />Average Price Level<br /> AD2<br />AD1<br />Y1 Y2<br />GDP<br />
  18. 18. Inflation/Unemployment Trade-off <br />Stagflation: with a standard se tof AD and AS curves, there is an inverse relationship with inflation and unemployment. <br />Keynesian theorist, increase AD to reduce unemployment<br />Caused -> Stagflation<br />
  19. 19. Stagflation<br />Stagflation: <br />A persistent high inflation combined with a high unemployment and stagnant demand in a countries economy<br />SRAS2<br />SRAS1<br />P2<br />P1<br />Average Price Level<br />AD1<br />Y2 Y1<br />GDP<br />
  20. 20. Viewpoints: Monetarist<br />Beliefs:<br />Markets work<br />Economies tend towards full employment<br />Inflation is caused by excessive money supply growth<br />Governments should intervene really only to control inflation by controlling money supply growth<br />
  21. 21. Monetarist AS curve<br />LRAS<br />Price level<br />SRAS<br />AD will be purely inflationary in the long run, and so policy should focus on increasing AS<br />GDP<br />
  22. 22. Viewpoint: Keynesian<br />Beliefs: <br />Markets are slow to adjust (time lags)<br />An economy can be in equilibrium below full employment<br />Governments should and can effectively intervene to stabilize an economy<br />Fiscal is more effective than monetary policy<br />
  23. 23. Keynesian AS curve<br />LRAS<br />Price level<br />SRAS<br />AD will increase output/income without increasing inflation as long as the economy is below full employment.<br />GDP<br />

×