Lecture2 - The Six Key Macroeconomic Variables Chapter 2...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
The Six Key Macroeconomic Variables Chapter 2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Before We Get To the Six Variables… ! Business Cycles 6/24/08 2 © 2008 Arnav Sheth. All rights reserved.
Background image of page 2
Business Cycles ! A baffling phenomena in macroeconomics ! If you figure out what causes them… ! Fluctuations in production, employment, prices, stock markets and interest rates ! booms or expansions occur when production grows and unemployment falls ! recessions or depressions occur when production falls and unemployment rises 6/24/08 3 © 2008 Arnav Sheth. All rights reserved.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Business Cycles Actual vs. Potential GDP (Annual % change, $ 2000 ) 6/24/08 4 © 2008 Arnav Sheth. All rights reserved.
Background image of page 4
Business Cycles Actual vs. Potential Unemployment 6/24/08 5 © 2008 Arnav Sheth. All rights reserved.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Business Cycles Industrial Production Relative to Trend (Figure 1.3) 6/24/08 6 © 2008 Arnav Sheth. All rights reserved.
Background image of page 6
NBER Business Cycles 6/24/08 7 © 2008 Arnav Sheth. All rights reserved.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Six Key Macroeconomic Variables 1. Real GDP 2. Unemployment 3. Inflation 4. Interest Rate 5. Stock Market 6. Exchange Rate 6/24/08 8 © 2008 Arnav Sheth. All rights reserved.
Background image of page 8
The Six Key Macroeconomic Variables 1. Real GDP 2. Unemployment 3. Inflation 4. Interest Rate 5. Stock Market 6. Exchange Rate 6/24/08 9 © 2008 Arnav Sheth. All rights reserved.
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Inflation Rate ! The inflation rate is a measure of the rate of change in the price level over time ! is a flow variable ! The inflation rate can be measured using different price indices ! Consumer Price Index (CPI) ! GDP deflator 6/24/08 10 © 2008 Arnav Sheth. All rights reserved.
Background image of page 10
The Inflation Rate Figure 1.6 6/24/08 11 © 2008 Arnav Sheth. All rights reserved.
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Consumer Price Index ! Is a measure of the price-level in the economy ! Calculated by the Bureau of Labor Statistics (BLS) ! Expenditure -weighted index ! Has little meaning by itself ! But its relative value is important ! e.g., if CPI 2006 = 100 and if CPI 2007 = 110 ! Inflation ’06-’07 = 10% ! Is measured using a fixed basket of goods ! Basket includes (from the BLS website): ! FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks) ! OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/05/2008 for the course ECON 100B taught by Professor Wood during the Summer '08 term at University of California, Berkeley.

Page1 / 47

Lecture2 - The Six Key Macroeconomic Variables Chapter 2...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online