The document provides a review of macroeconomic concepts to summarize in 3 sentences or less:
- It asks the reader to draw production possibility frontiers (PPFs) to illustrate opportunity cost, actual and potential output, points of efficiency and inefficiency, and unattainable points.
- It also asks the reader to draw a PPF representing growth with and without development and defines different types of unemployment, asking the reader to represent one type with a graph.
- Finally, it provides text on inflation and unemployment, the Phillips curve, aggregate demand and supply, and monetary and fiscal policy tools like the spending multiplier and crowding-out effect.
Since the late 1990s, aggregate inflation has been less sensitive to changes in economic conditions than it has in previous decades. Analysis using the Phillips curve model at the component level shows that cyclical sensitivity of inflation varies substantially for different types of goods and services. In particular, inflation for most service components (such as shelter) and food has remained largely “pro-cyclical” (that is, rising during economic expansions and falling during economic contractions), but inflation for many types of goods (such as motor vehicles) has not. The lack of cyclical sensitivity in price inflation for goods helps explain the decreased cyclical sensitivity of aggregate inflation over the past two decades.
Also during that period, inflation expectations have become more anchored and less dependent on past inflation. Analysis using the Phillips curve model with 10 different measures of aggregate inflation suggests that that process is probably incomplete. In particular, both past inflation and the constant term in the Phillips curve model appear to help explain the dynamics of inflation through the lens of that model.
Presentation by Yiqun Gloria Chen, an analyst in CBO’s Macroeconomic Analysis Division, at the University of Michigan’s 66th Annual Economic Outlook Conference.
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
Since the late 1990s, aggregate inflation has been less sensitive to changes in economic conditions than it has in previous decades. Analysis using the Phillips curve model at the component level shows that cyclical sensitivity of inflation varies substantially for different types of goods and services. In particular, inflation for most service components (such as shelter) and food has remained largely “pro-cyclical” (that is, rising during economic expansions and falling during economic contractions), but inflation for many types of goods (such as motor vehicles) has not. The lack of cyclical sensitivity in price inflation for goods helps explain the decreased cyclical sensitivity of aggregate inflation over the past two decades.
Also during that period, inflation expectations have become more anchored and less dependent on past inflation. Analysis using the Phillips curve model with 10 different measures of aggregate inflation suggests that that process is probably incomplete. In particular, both past inflation and the constant term in the Phillips curve model appear to help explain the dynamics of inflation through the lens of that model.
Presentation by Yiqun Gloria Chen, an analyst in CBO’s Macroeconomic Analysis Division, at the University of Michigan’s 66th Annual Economic Outlook Conference.
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
I prepared this slide on my research paper 'fiscal deficit and inflation ' on the current economic situation of India. In this data has been collected from economic survey 2011-12 and several other books. This slide has full data how the the central govt. and central bank uses their, fiscal policy and monetary policy respectively Hope, it will provide a good help for students who want to know about these concepts of economics.
gaurav tripathi(undergrad econ)>
I prepared this slide on my research paper 'fiscal deficit and inflation ' on the current economic situation of India. In this data has been collected from economic survey 2011-12 and several other books. This slide has full data how the the central govt. and central bank uses their, fiscal policy and monetary policy respectively Hope, it will provide a good help for students who want to know about these concepts of economics.
gaurav tripathi(undergrad econ)>
Why Digitization Increases the Value of Print CollectionsBaden Hughes
Invited Talk at EDUCAUSE Australia 2007 Workshop "Wagging the Long Tail: Managing print collections in a digital age"
http://www.caval.edu.au/Wagging.html
13 trender som kommer påverka din affär i framtidenJohan Ronnestam
Idag genomförde jag en föreläsning i Båstad. Jag träffade 15 chefer och mellanchefer som genomgått en Executive MBA utbildning. Målet med föreläsningen var att inspirera och få upp ögonen för framtidens affärsklimat.
MACRO PART 2 Handout Guide (See Handouts for Help)SECTION 9a).docxinfantsuk
MACRO PART 2 Handout Guide (See Handouts for Help)
SECTION 9
a)-d) HO17 P2,3
SECTION 10
a)-c) HO17 P3
d) HO17 P4
e) I did in class
f) HO17 P7
g) HO17 P10
SECTION 11
a) HO18 P2
b) HO18 P5 top
c) HO18 ↓D↑S
d) HO18 ↑D↓S
SECTION 12
a) HO20 P4 top
b) HO21 P4 bottom
c) HO21 P5 top
d) HO21 P5 bottom
e) HO21 P6 top
f) HO21 P7 bottom right
SECTION 13
a) HO22 P6
b) HO22 P7 top
c) HO22 P7 bottom
d) HO23 I showed how in class
e) HO23 P1
f) HO23 P4 bottom
g) HO23 P3 or P4 top depending on what you did in f)
h) HO23 P5 bottom 2 graphs
SECTION 14
a) HO24 P1,2
b) HO24 P10 2 graphs
c) HO24 P12
d) HO24 P2
e) HO24 P3
f) HO24 P4
g) HO24 P6
SECTION 15
a) HO21 P4 bottom
b) HO21 P5 top
c) HO27 P8
d) HO25 P2
e) HO25 P3 only move to the left, not back
f) HO21 P3
g) HO27 P11
SECTION 16
a) HO26 P1
b) HO26 P2
c) HO26 P3 2 graphs
d) HO26 P4 other direction (decrease)
SECTION 17
a) HO27 P3 top 2 paragraphs
b) HO27 P9 top and P11. Also look at HO17 for 3 methods.
c) HO27 P6 and P8. Also look at HO17 for 3 methods.
d) HO27 P5 bottom graph. Ripple pages 8 bottom thru 11
e) HO27 P5 top graph. Ripple pages 6 thru 8
Handout #25P
Inflation
Up, Up and Maybe Away
Inflation is an ongoing process in which there is a broad increase in the price level and money is losing its purchasing value. Changes in the money supply cause changes in the price level. Changes in the price level can be one-time or a persistent rise in the rate at which the price level increases.
Demand-Pull Inflation
A one-time demand induced price increase comes from a outward shift in aggregate demand, such as an increase in the money supply or a component of GDP—C, I, G or NX.
The one-time demand induced increase will lead to an increase in aggregate demand and the economy will be in an inflationary gap—the price level will be higher, real GDP will be higher than Qn and unemployment will be lower than Un. Since the economy is self-regulating, the shortage in the labor market with U < Un will lead to wages being bid up. Higher wages lead to increased costs to producers, which in turn leads to a decrease in SRAS back to Qn. Basically, a demand-induced change leads the self-regulating economy back the full employment level of real GDP, at a higherpricelevel.
Demand-pull inflation rises from continual outward shifts in aggregate demand which are caused by continuous increases in the money supply.
Continual increases in the money supply will lead to continual increases in aggregate demand and the economy will be in repeated inflationary gaps—in repeated cycles, the price level will be higher, real GDP will be higher than Qn and unemployment will be lower than Un. Since the economy is self-regulating, the shortage in the labor market with U < Un will lead to wages being bid up. Higher wages lead to increased costs to producers, which in turn leads to a decrease in SRAS back to Qn. Basically, continuous increases in the money supply leads the self-regulating economy back the full employment le ...
Running head Fundamentals of Macroeconomics 1Fundamentals.docxcharisellington63520
Running head: Fundamentals of Macroeconomics
1
Fundamentals of Macroeconomics
2
Fundamentals of Macroeconomics
Week 2 Assignment
ECO/372
Macro Economics is a study which is concerned with the economy as a whole and the level of total output which is also referred to as national income is a very important variable in any economy. National income measures the value of an output produced in an economy over a period of time and the policy makers should be aware of the level of economic activity taking place within the country on behalf of the nationals.
One of the most important objectives of the government is to increase the level of the rate of economic growth which is possible only be measuring the national income. The main uses of the national income statistics are:
1. It shows the current allocation of resources,
2. It helps the government in economic planning,
3. It helps measures the country’s standard of living, and
4. It helps in the comparison of the living standard between different countries.
There are some important concepts of National Income such as Gross Domestic Product, Gross National product, net National product and The GDP per capita.
Gross domestic product: “GDP is the total value of all output produced using resources located within the economy over a given period of time”. It refers to the market value of all final goods and services produced within a country in a given period (O'Sullivan, Arthur).
GDP measures the annual value of all economic activity taking place within the economy and the GDP measures are on a value added basis in order to avoid the problem of double counting. There are three ways of calculating the GDP but the results of all the three methods should be the same. They are:
· The Output Method.
· The Income Method.
· The Expenditure Method.
Nominal GDP: Also known as the money GDP is measured in terms of the prices operating in the year in which the output is produced. it is sometimes referred to as GDP at market prices. It can give a wrong impression about the performance of the economy, because of the changes in the value of money which depends on the price level, which is subject to changes. Normally the Nominal GDP converted into Real GDp which is a measure of adjustment for inflation is used to calculate the National performance. Real GDP therefore is: money GDP/ the price index of the current year X Price index of the base year or money GDP/ GDP deflator of the current year X Price index of the base year (HM Treasury, Background information on GDP and GDP deflator).
Unemployment rate: Employment is the total number of people with a job which includes the employees, businessmen and self employed people. The number employed may change over time due to many factors. While unemployment refers to those people who have registered, able, available and willing to work at the going wage rate at any suitable job but cannot find employment. Unemployment is measured at a point of time and.
The Multiplier content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics
Intro to the Multiplier
Calculating the Multiplier Ratio
Factors Affecting the Multiplier
Significance of AD on the Multiplier
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Digital Tools and AI for Teaching Learning and Research
Unit3 hl
1. Macroeconomics Review Draw a PPF for guns and butter and show the following concepts: - opportunity cost - actual output - potential output - point of efficiency - point of inefficiency - unattainable point Also draw a PPF to represent GROWTH with and without DEVELOPMENT.
5. Define microeconomics and macroeconomics.Micro: the branch of economics that studies the economy of consumers or households or individual firms Macro: the study of economics in terms of whole systems, especially with reference to general levels of output and income and to the
6.
7. What type of unemployment is this, and represent it with a graph.
8.
9. Inflation and Unemployment the Phillips Curve (HL only) Graphing the inflation/unemployment relationship: the Phillips Curve ·In the short-run, there is an inverse relationship between the price level and the unemployment rate ·When AD is weak, unemployment will increase and there is downward pressure on prices. ·When AD is strong, unemployment falls and there is upward pressure on prices as the economy approached full-employment. ·When economy is at equlibrium, UE will be stable at the Natural Rate of Unemployment Inflation (ΔPL) 8% Pfe 2% PC 2% 8% NRU Unemployment
10. Inflation and Unemployment the Phillips Curve (HL) AD/AS and the Phillips Curve: Assume the economy is at full employment, with an inflation rate of 3% and an unemployment rate of 5% (NRU). The economy is at point A on its Phillips Curve. When aggregate demand increases, price levels rise, output increases, causing unemployment to fall, and the country moves from point A to point B on the PC. When AD falls, there is downward pressure on the price level and the fall in output means fewer workers are needed. Inflation falls and unemployment increases, moving from point A to C on the PC. In the short-run, there is a trade-off between unemployment and inflation! ASlr ASsr PL Inflation (ΔPL) B Pb 5% A Pa 3% AD1 C Pc 1% AD1 PC AD read GDP 4% 6% Yfe Y1 NRU Unemployment Inflation increases as Unemployment decreases!
11. Inflation and Unemployment the Phillips Curve (HL) Question: What could cause the PC to shift out from PC to PC1 ? In other words, what could cause an increase in both unemployment AND inflation? Answer: Stagflation ·A leftward shift of the SR Aggregate Supply curve will cause both unemployment and inflation to increase simultaneously. ·The Phillips Curve will shift to the right ·The economy will experience UE greater than the NRU and higher than desired rates of inflation. Inflation (ΔPL) I1 Ife PC1 PC Factors that could cause stagflation: ·sharp increases in fuel costs ·rising food prices ·weak currency Unemployment NRU >NRU
12. Inflation and Unemployment the Phillips Curve (HL) AD/AS and the Phillips Curve: Assume the economy starts at full employment. When aggregate supply decreases, price levels rise and output falls causing unemployment to increase. When AS falls, there are upward pressures on the price level and on unemployment. This is shown in an outward shift of the Phillips Curve, and known as STAGFLATION (stagnant grown combined with inflation) ASsr1 ASlr ASsr PL Inflation (ΔPL) B Pb I1 A Ife Pa AD1 PC1 PC read GDP Yfe Y1 >NRU NRU Unemployment
13. Inflation and Unemployment the Phillips Curve - SR to LR (HL) What happens to the Phillips Curve when there is an increase in spending and AD shifts out? ·Unemployment will decrease below NRU, ·Price level will increase Phillips Curve moves from A to B ·With rising inflation, workers will begin demanding higher wages. ·Wages are a resource cost, so when they increase AS will shift to the left ·Leftward shift of AS restores full-employment output ·Higher resource costs cause the price level to increase Phillips Curve moves from B to C If AD increases again, the process will repeat itself: Rising prices lead to higher wages which leads to AS shifting in, UE returning to NRU, and price level increasing ever higher D E P2 C Inflation (ΔPL) P1 B Pfe A PC2 PC1 PC NRU <NRU Unemployment
14. Inflation and Unemployment the Long-run Phillips Curve the Long-run Phillips Curve: In the long-run, there is NO tradeoff between inflation and unemployment. PClr Understanding the LR PC: As AD increases, UE will decrease in the short-run, when wages are fixed. In the log-run, wages and other resource costs are variable, and will adjust to the higher price level, causing AS to shift left Output will always return to the full-employment level, and unemployment to the NRU. Consequently, in the long-run, there is no tradeoff between unemployment and inflation! P2 Inflation (ΔPL) P1 Pfe PC2 PC1 PC NRU <NRU Unemployment The Long-run Phillips Curve is vertical at the Natural Rate of Unemployment.
15. Inflation and Unemployment Evaluating the Phillips Curve Does unemployment always return to the NRU (or Non-accelerating inflation rate of unemployment: NAIRU)? The neo-classical economists led by MiltionFriedmen argued that there was no long-run tradeoff between unemployment and inflation. Just as the long-run AS curve is vertical at full-employment GDP, the Phillips Curve is correspondingly vertical at the NAIRU (NRU). Is an economy's unemployment doomed to always return to some set level?NO! The implication of the LR PC is not that UE will always be at the same NRU, rather that demand-side policies are ineffective at decreasing UE in the long-run. SUPPLY-SIDE policies, however, can lower the UE in the long-run. More productive, lower cost resources will shift LRAS out, and the LR PC to the left.
16. Inflation and Unemployment Evaluating the Phillips Curve Supply-side expansion and the Phillips Curve: Expansionary supply-side policies lead to a more productive workforce, more efficient resources, and lower costs to firms and an outward shift of the LRAS, which is consistent with a lower natural rate of unemployment. An outward shift of LRAS results in a leftward shift of the LRPC. ASlr1 ASlr PClr PClr1 ASsr PL ASsr1 Inflation (ΔPL) P1 P2 AD Yfe Y1 read GDP (employment) NRU NRU1 Unemployment
17. Macroeconomics Review During a recession, most governments will rely on fiscal policy to some extent and increase government spending. But how much should they spend?
18. Macroeconomic Models Spending Multiplier (HL only) The Spending Multiplier: Any increase in spending in the economy (C, I, G, Xn) will multiply itself through further rounds of new spending, resulting in a larger increase in GDP than the initial change in spending. The size of the spending multiplier depends on society's Marginal Propensity to Consume Marginal Propensity to Consume:The proportion of any change in income used to consume domestically produced output MPC = ∆Consumption / ∆Income Marginal Propensity to Save:The proportion of any change in income saved, used to pay off debts, or to purchase imports MPS= 1-MPC MPC + MPS = 1 1 1 or Spending Multiplier = MPS 1 - MPC
19. Macroeconomic Models Spending Multiplier (HL only) Example of the spending multiplier effect: The Swiss government wishes to stimulate spending in the economy. To do so, it increases government spending on infrastructure projects by SFR 10b Assume Swiss household tend to spend 40% of new income on Swiss goods and services, while 60% goes towards savings, debt repayment and purchase of imports Price level 1 = 1.67 Multiplier = .6 An initial change in spending of SFR 10b will result in an increase in Switzerland's GDP of SFR 16.7b AD1 G increases Aggregate Demand real Output or Income (Y) Blog posts: "The Multiplier Effect"
20. Demand and Supply-Side Policies the Crowding-out Effect Crowding-out effect:when a deficit-financed increase in government spending drives up interest rates, thereby directing productive resources away from the private sector towards the public sector Question: How do governments get money to finance their budgets if they lower taxes at the same time that they increase spending (expansionary fiscal policy)? Answer:they borrow from the public by issuing new government bonds BOND (definition):The general term for a long-term loan in which a borrower agrees to pay a lender an interest rate (usually fixed) over the length of the loan and then repay the principal at the date of maturity. Bond maturities are usually 10 years or more, with 30 years quite common. Bonds are used by corporations and federal, state, and local governments to raise funds. (source: www.amosweb.com/)
21. Demand and Supply-Side Policies the Crowding-out Effect What causes crowding out? ·When the government issues new bonds to finance its budget deficits, the supply of bonds increases in the bond market, lowering the bond price and increasing the interest rates on bonds ·The higher return on government bonds directs savings away from commercial banks, decreasing the supply of loanable funds for the private sector to invest with, driving up commercial interest rates ·The increase in borrowing by the government may lead to a decline in private investment, thus "crowding-out" private enterprise in the economy ·Crowding-out can also refer to the re-allocation of physical resources (labor, land and capital) away from the private sector towards the public sector as the government embarks on projects requiring large inputs of productive resources.
22. Demand and Supply-Side Policies the Crowding-out Effect Crowding-out effect:Graphical representation Interpretation: The government's "transaction demand" for money increases as it must finance its budget deficit, shifting money demand out, driving up interest rates Two ways to illustrate crowding-out: ·The impact on the Money Market Crowding-out in the Money Market Money Market Investment Demand S Private investment is "crowded-out" due to increased government borrowing Interest rate 7% Interest rate 5% D2 DI Dmoney Q2 Q1 Q1 Quantity of Investment Quantity of money
23. Demand and Supply-Side Policies Monetary Policy (IB and AP) The Money Market: an introduction Supply of money: Money supply is established by the Central Bank, it is perfectly inelastic since it is based on policy goals ·Money supply can increase: If a central bank wishes to lower interest rates, it can increase the supply of money in the economy by buying bonds from the public ·Money supply can decrease:If a central bank wishes to increase interest rates, it can decrease the supply of money in the economy by selling bonds to the public Expansionary Monetary Policy Contractoinary Monetary Policy S S1 S S1 Interest rate Interest rate 6% 5% 5% 4% Dmoney Dmoney Q2 Q1 Q1 Q2 Quantity of money Quantity of money
24. Demand and Supply-Side Policies Monetary Policy Expansionary Monetary Policy - how it works: Excess reserves, money supply checkable deposits and bank reserves GDP, employment, price level CB buys bonds from public and banks Interest rates C, I AD Central Bank Central Bank buys bonds from banks, injecting liquidity to excess reserves Central Bank buys bonds from public, increasing amount of checkable deposits $ $ $ $ $ B $ B B $ B $ $ B B B B $ $ $ $ the Public Commercial Banks Contractionary Monetary Policy - how it works: Excess reserves, money supply checkable deposits and bank reserves GDP, employment, price level CB sells bonds to public and banks Interest rates C, I AD