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Class i macro 0810


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Class i macro 0810

  1. 1. The Economy and Business Activity
  2. 2. Managers and Economic Environment <ul><li>Firm Level </li></ul><ul><ul><li>Market Structure and Influence on Prices </li></ul></ul><ul><ul><li>Cost advantage by lowering costs of production </li></ul></ul><ul><ul><li>Product differentiation </li></ul></ul>
  3. 3. <ul><li>External Environment </li></ul><ul><ul><li>Demand will grow at a stable rate </li></ul></ul><ul><ul><li>Interest rates will be stable </li></ul></ul><ul><ul><li>Stability in prices </li></ul></ul><ul><ul><li>Stability in tax rates </li></ul></ul><ul><ul><li>Exchange rate fluctuations </li></ul></ul>
  4. 4. Macroeconomics- An Introduction <ul><li>Concerns with behavior of the economy as a whole </li></ul><ul><li>Deals with both long run economic growth and short run fluctuations. </li></ul><ul><li>Focuses on the economic behavior and policies that affect consumption and investment, currency and trade balance, determinants of changes in wages and prices, monetary and fiscal policies, money stock, budget, interest rates and national debt </li></ul>
  5. 5. <ul><li>These essentials lie in the interactions among the goods, labor and assets markets of the economy and in the interactions among national economies that trade with each other </li></ul>
  6. 7. Figure 1.01 Output of the U.S. economy, 1869-1996
  7. 8. Figure 1.02 Average labor productivity in the United States, 1900-1998
  8. 9. Figure 1.03 The U.S. unemployment rate, 1890-1998
  9. 10. Figure 1.04 Consumer prices in the United States, 1800-1998
  10. 11. Figure 1.05 U.S exports and imports, 1869-1998
  11. 12. Figure 1.06 U.S. Federal government spending and tax collections, 1869-1999
  12. 14. Job creation and job destruction in U.S. manufacturing .
  13. 15. Interest rates and bankruptcies in the Netherlands .
  14. 16. Volatility in the oil markets
  15. 18. The Circular Flow of Income
  16. 19. The circular flow of income The interdependence of goods markets and factor markets
  17. 20. The interdependence of goods and factor markets FIRMS (suppliers of goods and services, demanders of factor services) HOUSEHOLDS (demanders of goods and services, suppliers of factor services)
  18. 21. The circular flow of income Consumption, injections, withdrawals and equilibrium
  19. 22. The circular flow of income Firms Households Factor payments Consumption of domestically produced goods and services (C d )
  20. 23. Factor payments Consumption of domestically produced goods and services (C d ) The circular flow of income WITHDRAWALS INJECTIONS Investment ( I ) Government expenditure ( G ) Export expenditure ( X ) BANKS, etc Net saving ( S ) GOV. Net taxes ( T ) ABROAD Import expenditure ( M )
  21. 24. The interdependence of goods and factor markets P Q P Q (1) Consumer demand (4) Factor supply (3) Factor demand (2) Producer supply O O Q 1 P 1 Q F 2 P F 2 Q 2 P 2 P F 1 Q F 1 D 2 D 2 £ £ £ £ Factor services Goods Goods Factor services S S D 1 D 1