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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

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slide1

ECON 103 Principles of Macroeconomics

  • Instructor: Bernard Malamud
    • Office: BEH 502
        • Phone (702) 895 –3294
        • Fax: 895 – 1354
        • Website: www.unlv.edu/faculty/bmalamud
        • Office hours: MTWThF11:30-12:30 pm; and by appointment
slide2

Gauging Your Opinions – I

The U.S. government is bankrupt ... or soon will be bankrupt.

True b) False

I expect to receive Social Security benefits when I retire.

Yes b) No

The US unemployment rate as officially measured is usually around

a) 2% b) 5% c) 8% d) 10%

The US unemployment rate as officially measured is now around

a) 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
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 Thinking

From micro: Incentives matter!

macro concerns
Macro Concerns
  • Jobs
  • Growth
  • Price Stability
  • Government Budget
  • Balance of Payments
  • Exchange Value of Dollar
monetary policy and interest rates
Monetary Policy and Interest Rates

Federal

Funds

Rate

London Interbank Offer Rate (LIBOR)

what we ll cover
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
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 around

a) 2% b) 5% c) 8% d) 10%

The US balance of trade in goods and services is

a) positive b) negative c) balanced...it has to balance

micro foundations a brief review production possibilities frontier
Micro Foundations: A Brief Review Production Possibilities Frontier

Quantity of

Computers

Produced

D

C

A

Production

Possibilities

B Feasible

but Inefficient

Frontier

Efficient

Points

Quantityof

Cars Produced

0

micro foundations macro application production possibilities frontier
Micro Foundations: Macro Application Production Possibilities Frontier

When economy is at full employment (C), an increase in

bovernment purchases raises prices

and “crowds out” private activity

Private

Sector

Output

D

C

A

Production

Possibilities

B Feasible

but Inefficient

Frontier

Efficient

Points

Government

Purchases

0

micro foundations macro application production possibilities frontier1
Micro Foundations: Macro ApplicationProduction Possibilities Frontier

When economy is at less than full employment (B) , an increase

in government purchases increases incomes and spurs additional

private sector activity as well (multiplier effect)

Private

Sector

Output

D

C

A

Production

Possibilities

B Feasible

but Inefficient

Frontier

Efficient

Points

Government

Purchases

0

micro foundations a brief review supply and demand

Supply

Equilibrium

Demand

Micro Foundations: A Brief ReviewSupply and Demand

Price of Ice-Cream Cone

$3.00

2.50

2.00

1.50

1.00

0.50

Quantity of Ice-Cream Cones

0

1

2

3

4

5

6

7

8

9

10

11

12

macroeconomics aggregate demand and aggregate supply

AS

AD

Macroeconomics: Aggregate Demand and Aggregate Supply

Price Index

Potential

Real

GDP

3.00

2.50

2.00

1.50

1.00

0.50

Real GDP

0

1

2

3

4

5

6

7

8

9

10

11

12

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