DOC PREVIEW
O-K-State ECON 2203 - Principles of Macroeconomics
Type Lecture Note
Pages 3

This preview shows page 1 out of 3 pages.

Save
View full document
View full document
Premium Document
Do you want full access? Go Premium and unlock all 3 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 3 pages.
Access to all documents
Download any document
Ad free experience

Unformatted text preview:

Econ 2203 1st Edition Lecture 26KeyDefinitionsImportant InformationFill in the blankExamplesEquationsOutline Three Facts about short-run economics  Aggregate Supply and Aggregate Demand model- Over the long run, real GDP grows about 3% per year on average- In the short run, GDP fluctuates around its trendo Recession : periods of falling real incomes and rising unemploymento Depression : severe recessions (very rare)- Short-run economic fluctuations are often called business cyclesThree facts about short-run economicsFact 1: Economic Fluctuations are irregular and unpredictableFact 2: Most Macroeconomic Quantities fluctuate togetherFact 3: As Output Falls, Unemployment risesExplaining Short-run Economic Fluctuations Recall: To study economy in the long run: - The Classical Dichotomy, the separation of variables into two groups: o Real – quantities, relative priceso Nominal – measured in terms of money- The Monetary Neutrality: Changes in the money supply (price) affect nominal but not real variablesExplaining Short-run Economic Fluctuations Recall: due to Monetary Neutrality - In the long-run, changes in price does not affect real GDP- In the short-run, changes in price affect real GDP- To study the short run, most economists use the model of aggregate demand and aggregate supply to study fluctuationsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- The model shows the relationship between supply and demand in the short runSupply and Demand Model - Price of one product- Quantity of one productAggregate Supply and Aggregate Demand Model- Price of all goods and services- Quantity of all goods and servicesThe Long-run Aggregate Supply Curve (LRAS) What determines the quantity of goods and services supplied in the long-run?- It depends on:o Laboro Capitalo Natural resourceso Technology - Economic Growth (real GDP growth in the long run) does NOT depend on: o Price- An increase in P does not affect LRAS (long-run real GDP)- This is consistent to the idea of Classical Dichotomy and Money Neutrality: Money supply does not affect real variables in the long-run- The Natural rate of output (YN) – the amount of output the economy produces when unemployment is at its natural rateWhy the LRAS Curve Might Shif - Any event that changes any of the determinants of YN will shift LRAS. - Determinants:o Laboro Capitalo Natural Resourceso Technology Example: Immigration increases L, increase in (Yn), causes LRAS to shift- Changes in Labor (L or natural rate of unemployment) o Immigration - (shifts right)o Baby-boomers retire -(shifts left)o Government policies reduce natural unemployment rate - (shifts right)- Changes in Capital (K or H) o More Investment in factories, equipment - (shifts right)o More people get college degrees - (shifts right)o Factories destroyed by a hurricane - (shifts left)- Changes in Natural Resources o Discovery of new mineral deposits - (shifts right)o Reduction in supply of imported oil - (shifts left)- Changes in Technology o Productivity improvements from technological progress - (shifts right)Principle of MacroeconomicsLecture Notes > VERY DETAILED > COLOR CODED> Easy to read > May include information that was stated directly from the teacher in


View Full Document

O-K-State ECON 2203 - Principles of Macroeconomics

Type: Lecture Note
Pages: 3
Download Principles of Macroeconomics
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Principles of Macroeconomics and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Principles of Macroeconomics 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?