Economics 100B Lecture 7

Economics 100B Lecture 7 - Economics 100B Professor Wood...

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ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Please do not share, copy or illegally distribute these notes. Our non-profit, student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. Sharing or copying these notes is illegal and could end note taking for this course Lecture 7 Note : For future reference, the graphs referred to in these notes can be found at http://emlab.berkeley.edu/users/webfac/wood/e100b _sp08/e100b.shtml . These are the lecture slides that Professor Wood uses in class. Use the slides corresponding to the appropriate lecture in order to understand better the graphical aspect of this class. The slides follow the order of both these notes and of the lecture. You should fill these graphs out, drawing in relevant lines. Long Run Economic Growth, Part 1. Problem Sets due today. They will be returned in discussion section. Today, we are going to shift focus towards the issue of economic output. What causes economies to grow over the long term? Just because we are looking at a long term model, there are near term applications to the models we will discuss today. News : Geography of recession: Last time we talked about how different industries are responding differently to the overall economic slowdown. Times of slowdown or expansion do not affect all parts of the country/all industries evenly. So, not every region, and not every industry feels the effects. Mortgage crisis is spreading beyond subprime loans: Payments rise as home values fall, even for borrowers with high credit. Many individuals who have good credit and can afford to pay the mortgage payment are finding that it is in their benefit to relinquish their home, as its worth is less than the owed amount. Banks are hit with the loss. These effects are spreading towards other areas of credit. 6-9 months ago this problem was contained in the housing sector. Since this has spilled over to jobs, retail etc, this has caused more sprawling effects. White house does not ‘see a recession’: Public officials normally need to maintain a more positive outlook than is realistic in order to keep stability. Fears of recession can be self-fulfilling. The same can be said about inflation. Haas School Teach in, regarding the health of the economy: For more go to: www.haas.berkeley.edu Agenda: Sources of Economic Growth Growth Dynamics: The Solow Model Intro:
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ASUC Lecture Notes Online Economics 100B 2/12/08 We have already looked at some of the factors that influence growth and output in the economy, but we have not fully evaluated why they occur. The Solow model examines the causes of economic growth.
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This note was uploaded on 02/15/2008 for the course ECON 100B taught by Professor Wood during the Spring '08 term at Berkeley.

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Economics 100B Lecture 7 - Economics 100B Professor Wood...

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