Macro Economics 1B

Macro Economics 1B - Macro Economics 1B Brian Rosario 1. Ch...

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Macro Economics 1B Brian Rosario 1. Ch “Seventeen” aka 5 2. Unemployment is surplus labor, drop the price and eliminate unemployment, in macro there are situations where there is no equilibrium. 3. Real GDP – variables of Macro Econ to evaluate the econ a. Real Gross Domestic Product (GDP )- a measure of the value of all newly produced goods and servies in a country during some period of time, edjusted for chang in prices over time. i. Strong econ has solid sustained growing GDP, dropping unemployment and constant prices. ii. Real GDP is sum of all products produced. #1 variable b. Note: The adjective “real’ means that the GDP has already been adjusted to remove the effects of prices over time. i. Opposite of “real” is nominal which is not adjusted for inflation or changes in the prices. 1. ex. nominal wages are 7.50/hour 2. Real is purchasing power with the wage. c. Economic growth - an upward trend in real GDP, reflecting an expansion in the economy over time. i. How much produced in the past over a long period of time ii. Rule: produce more than produced before is a growing econ. iii. iv. What makes a country grow fast or slow? v. There are times where the econ is growing faster or slower than the long run trend. d. Economic fluctuations - swings in the real GDP that leads to deviations of the economy from its long term trend.
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i. Is the US econ in a recession? No. Is it headed towards one? Maybe (BLS.gov or fed reserves econ database) e. Figure 17.1 i. Graph w/inflation taken out. Scaled for percentage changes rather than dollar amounts. ii. The wiggly line is the REAL GDP- macro econ tries to figure out why it moves. iii. The straight line is the long term growth trend. iv. Blue lines are the periods of US economy in recession. 1. Recessions tended to happen close together, but are getting shorter and shorter and less severe and growth periods are longer because of macro economics. f. US real GDP i. Fact: The us real GDP is 2004 is larger than the economies of Japan (world’s 2 nd largest econ) and germany (3 ii. Refer to slides iii. Figure 17.2 Numbers are 2004, 1940, 2004 and 2004. 4. Economic Fluctuations a. Business Cycles- the ups and downs in GDP experienced by an economy. i. Except Antarctica b. Phases of Business Cycles- these are not proportionate i. Peak- highest point ii. Recession- econ begins to go down iii. Trough- lowest point iv. Recovery- back up again. c. Peak d. e. Recession- a decline in creal GDP that lasts for atleast 6 months. f. Peak- The highest point in real GDP before a recession g. Trough- the lowest point in real GDP at the end of a recession. h. Expansion- th eperiod between the trough of the recession and the next peak consisting of a general rise in output and employment.
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i. Recovery- the early part of an economic expansion immediately after a recession. j.
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This note was uploaded on 04/11/2009 for the course ECON 1b taught by Professor Sheffrin during the Spring '07 term at UC Davis.

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Macro Economics 1B - Macro Economics 1B Brian Rosario 1. Ch...

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