Economics 100B - 29 (5-01-07)

Economics 100B - 29 (5-01-07) - Economics 100B Professor...

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Economics 100B Professor Steven Wood 5/01/07 Lecture 29 ASUC Lecture Notes Online (formerly Black Lightning) 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 Today we will be examining some of the models we have already used and try to tie it all together. We will examine the short run versus the medium run versus the long run. We will also go over the rules of thumb for growth, unemployment, and inflation. Putting It All Together, Part 1 We have three models: 1) The IS-LM Model 2) The DAD-SAS Model 3) The Solow Growth Model The IS-LM Model 1) Very short-term orientation, typically about one year. 2) We determine the equilibrium level of income and interest rates in this model. 3) Our basic assumption is prices are exogenous and do not change; in other words, inflation is 0. 4) Income can deviate from potential. 5) Adjustment mechanism is through inventory change and changes in interest rates. The DAD-SAD Model 1) This model has a medium-run orientation, from 4-7 years. 2) We are trying to determine equilibrium income and inflation in this model. 3)
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This note was uploaded on 09/20/2009 for the course ECON ECON taught by Professor Shomali during the Spring '04 term at University of California, Berkeley.

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Economics 100B - 29 (5-01-07) - Economics 100B Professor...

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