Lecture_6_spring_2009

Lecture_6_spring_2009 - Lecture 6 Principles of...

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Lecture 6 Principles of Macroeconomics Econ 2 Spring, 2009
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Midterm Next Tuesday What’s on it? Everything until Economic Growth Readings, podcasts, lecture notes Bring: Scantron: Parscore Score Sheet (pink) #2 Pencil Calculator
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Midterm 40 multiple choice questions Similar to the homework problems and the midterm I posted
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CPI Over the last 12 months the inflation has A) up by 0.1% B) up by 2% C) down by 0.4% D) down by 1%
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Tracking the Economy CPI report
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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An Economic Model “War on Poverty” This phrase dates back to the 1960’s and Lyndon Johnson Concern over the causes and cures of mass poverty dates back at least 300 years
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An Economic Model The Principle of Population, As it Affects the Future Improvement of Society Thomas Malthus, 1798
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An Economic Model The Principle of Population, As it Affects the Future Improvement of Society Thomas Malthus, 1798 Background English Poor Law, 1601 (Not unlike welfare today)
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An Economic Model English Poor Law, 1601 Direct grants to the local poor Funded by local property taxes Napoleonic Wars (late 18th century): poverty and distress increased in England
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An Economic Model Proposals were made to have the local poverty grants and income supplements taken over by the central government and expanded on a national scale
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A Quick Aside Proposals also made like AFDC (aid to families with dependent children) Partly humanitarian Partly to encourage production of future soldiery!
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An Economic Model Proposals were made to have the local poverty grants and income supplements taken over by the central government and expanded on a national scale Malthus believed the proposals (although well-intentioned) unsound and counter-productive
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Malthusian Model Very famous model—didn’t exactly pan out For reasons we will discuss later
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Malthusian Model Short version: Population: Geometric (exponential) growth Constant growth rate , e.g., 2% Or, 1, 2, 4, 8, etc. Subsistence (Food): Arithmetic growth Constant difference: 1, 2, 3, etc. Malthus
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Malthusian Model Output, Y Labor, L Begins with productivity
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Productivity Output, Y Labor, L Average productivity of labor L 1 Y 1 O The slope of the orange ray from the origin is the average product of labor
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Productivity, example Output, Y Labor, L Average productivity of labor 20 100 O If Y=100 and L=20, then APL=5, which is the slope of the orange line
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Productivity Output, Y Labor, L Average productivity of labor L 1 Y 1 O L 2 Y 2 The green line has a lower slope so the APL is lower
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Productivity Output, Y Labor, L Average productivity of labor 20 100 O 40 120 For example, Y2 = 120 L2 = 40 APL = 3
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Marginal and Average Average Product of Labor:
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This note was uploaded on 11/01/2009 for the course ECON ECON2 taught by Professor Rupert during the Spring '09 term at UCSB.

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Lecture_6_spring_2009 - Lecture 6 Principles of...

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