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ECON 103 Principles of Macroeconomics Instructor: Bernard Malamud Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 Email: bernard.malamud@unlv.edu 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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Econ 103 principles of macroeconomics instructor bernard malamud office beh 502

  • ECON 103 Principles of Macroeconomics

  • Instructor: Bernard Malamud

    • Office: BEH 502

      • Phone (702) 895 –3294

      • Fax: 895 – 1354

        • Email: bernard.malamud@unlv.edu

      • Website: www.unlv.edu/faculty/bmalamud

      • Office hours: MTWThF11:30-12:30 pm; and by appointment


Econ 103 principles of macroeconomics instructor bernard malamud office beh 502

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



Macro facts growth recession and slump
Macro Facts: Growth, Recession and Slump

The

Long

Slump

The

Long

Slump





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