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  • Macroeconomic Issues: Cost of Living, Unemployment, Recessions and More

    Diunggah oleh

    Ahmad Khalid Nikbin
    26 tayangan3 halaman
    This document discusses macroeconomic topics and models. It begins by posing questions about why costs of living and unemployment rise, why recessions occur, and what policymakers can do. It then shows graphs of US GDP, inflation, and unemployment rates over time with major economic events labeled. The rest discusses economic models, using the market for university basketball tickets as an example to illustrate demand and supply, equilibrium, and how the model responds to changes in wins or heating prices. It concludes by defining endogenous and exogenous variables in these models.

    Deskripsi Asli:

    Economics

    Judul Asli

    ch1-Intermediate Micro

    Hak Cipta

    © Attribution Non-Commercial (BY-NC)

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    This document discusses macroeconomic topics and models. It begins by posing questions about why costs of living and unemployment rise, why recessions occur, and what policymakers can do. It then shows graphs of US GDP, inflation, and unemployment rates over time with major economic events labeled. The rest discusses economic models, using the market for university basketball tickets as an example to illustrate demand and supply, equilibrium, and how the model responds to changes in wins or heating prices. It concludes by defining endogenous and exogenous variables in these models.

    Hak Cipta:

    Attribution Non-Commercial (BY-NC)
    Unduh sebagai PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    26 tayangan3 halaman

    Macroeconomic Issues: Cost of Living, Unemployment, Recessions and More

    Diunggah oleh

    Ahmad Khalid Nikbin
    This document discusses macroeconomic topics and models. It begins by posing questions about why costs of living and unemployment rise, why recessions occur, and what policymakers can do. It then shows graphs of US GDP, inflation, and unemployment rates over time with major economic events labeled. The rest discusses economic models, using the market for university basketball tickets as an example to illustrate demand and supply, equilibrium, and how the model responds to changes in wins or heating prices. It concludes by defining endogenous and exogenous variables in these models.

    Hak Cipta:

    Attribution Non-Commercial (BY-NC)
    Unduh sebagai PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    dari 3

    1/15/2013

    Macroeconomic Issues
    ECON 3010 Intermediate Macroeconomics
    Chapter 1 The Science of Macroeconomics

    Why does the cost of living keep rising? Why are millions of people unemployed? Why are there recessions? Can policymakers do anything? Should they? What is the government deficit? How does it affect the economy? Why does the U.S. have a large trade deficit?

    U.S. Real GDP per capita


    (2005 dollars)
    $50,000

    U.S. Inflation Rate


    (% per year)
    25

    9/11/2001
    $40,000

    20 15

    World War I

    $30,000

    Great Depression World War I

    First oil price shock

    First oil price shock

    Second oil price shock

    Financial crisis

    10 5 0 -5 -10

    $20,000

    Second oil price shock World War II

    $10,000

    Great Depression
    1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

    Financial crisis

    $0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

    -15 2000 2010

    1/15/2013

    U.S. Unemployment Rate


    (% of labor force)
    30 25 20 15 10 5 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

    Economic models
    are simplified versions of a complex reality
    Second oil price shock

    World War I

    Great First Depression oil price shock Oil price shocks World War II Great Depression

    irrelevant details are stripped away

    are used to
    Financial crisis Financial crisis

    World War I

    show relationships between variables explain the economys behavior devise policies to improve economic performance

    The market for UW mens BB tickets: Demand


    demand equation:

    The market for UW mens BB tickets: Supply


    supply equation:

    Qd

    = D (P,W )

    Price of tickets

    Qs

    = S (P,PH )

    Price of tickets

    The demand curve shows the relationship between quantity demanded and price, other things equal.

    D
    Quantity of tickets

    The supply curve shows the relationship between quantity supplied and price, other things equal.

    D
    Quantity of tickets

    1/15/2013

    The market for tickets: Equilibrium


    Price of tickets

    The effects of an increase in wins


    demand equation:
    S

    Q d = D (P,W )

    Price of tickets

    equilibrium price

    D
    Quantity of tickets

    An increase in wins increases the quantity of tickets consumers demand at each price

    P2 P1 D1 Q1 Q2 D2

    equilibrium quantity

    which increases the equilibrium price and quantity.

    Quantity of tickets

    The effects of heating price increase


    supply equation:

    Endogenous vs. exogenous variables


    S2 S1

    Q s = S (P,PH)
    An increase in PH reduces the quantity of tickets UW supplies at each price

    Price of tickets

    The values of endogenous variables are determined in the model. The values of exogenous variables are determined outside the model: the model takes their values and behavior as given. In the model of supply & demand for tickets,
    endogenous: exogenous:

    P2 P1 D Q2 Q1
    Quantity of tickets

    which increases the market price and reduces the quantity.

    P, Q d, Q s W, PH

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