Macro1 - Macroeconomics 1/17/07 Class website:...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Macroeconomics 1/17/07 Class website: Microeconomics- -Markets and Firms -Consumer Models Analysis at an individual level Macroeconomics- -Gross Domestic Product = output by a country -Inflation = < 3% is desirable level -Unemployment Rate = 4% - 5% because people choose to be unemployed Examines countries economic standing world wide Policies -Federal Reserve…interest rate -Monetary Policy -Fiscal Policy War In Iraq History- 9/11 – bin Laden and Al Qada Invasion of Iraq on 1. Weapons of Mass Destruct. 2. Link Saddam and Al Qada March 20, 2003 -Invasion of Iraq as “war on terror” or “liberators” = LIES! Stiglitz and Bilmes -Paper describing long run war cost -CBO – majority of troops out by 2010 and full withdrawal by 2016 Cash Accounting- records expenses when payments are made –U.S. reports like this Accrual Accounting- records expenses when commitment is made How corporations record and Stiglitz and Bilmes reported Budgeting Cost July 2006 - $336 Govt budget surplus – revenue exceeds expenses Govt budget deficient – expenses exceed revenue 1/19/07 War on Iraq… Budgeting Cost 1. Spent to date -$336 million 2. Future spending on operations $389 billion 3. a. Veteran health care and disability compensation
Background image of page 1

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

View Full DocumentRight Arrow Icon
b. 3,000 dead; 30,00 wounded; 7,000 severely wounded; 200,000 treated (3x predicted) c. $127 billion through 4. Net increase defense spending a. 400,000 were reserved therefore they went from part-time reserve pay to full-time pay b. Recruitment cost have increased dc of war: $40,000/person $150,000/ special forces that re-enlist c. Depreciation of capital equipment (uniforms, guns…) maitinence is harder and 5x greater than predicted d. 150 billion through 2016 Total Cost is 1,012 billion –(or 1 trillion) U.S. treasury borrows money from savers throughout the world which expect interest payments) 5. Interest Expense a. $336 billion (until 2025): avg interest rate is 4% -Who will have to pay?? WE WILL!! DAMN IT Numbers 6,7,8 are not paid by government - Economic Cost 6. Net Economic Adjustments a. 300 million will have life long wounds = i. Loss of productive capacity (unable to produce goods and services for the next 30-40 yrs) (lost wage) ii. Multiply – lost in one persons job will effect others working opportunity and creates a multiplying effect on society b. Economic Value- 1 person is $6.5 million / with c. Total Cost - $355 billion 7. Supply side effect on oil a. Before War - $25/barrel b. Iraq = 2.5 million bpd “barrels per day” c. After War - $77/barrel d. Iraq = produces less then 1 million bpd e. Reduce global supply = price rise of $5 dollars … cont. through 2008 (5yrs) - U.S. imports 5 billion b/year f. Annual Cost = $5 x 5 billion = $25 billion g. Total Cost = $25 billion x 5 years = $125 billion over 5 yrs 8. Demand Side Effect of higher oil prices a. Less money to spend on other goods and services b. Gasoline is relatively inelastic (people will pay for higher prices)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/02/2008 for the course ECON 2020 taught by Professor Kaplan,jul during the Spring '08 term at Colorado.

Page1 / 15

Macro1 - Macroeconomics 1/17/07 Class website:...

This preview shows document pages 1 - 3. Sign up to view the full document.

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