ch1 - o Hyperinflation: extremely high inflation rate The...

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Macroeconomics Chapter 1 1) Monetary Policy 2) Unemployment 3) Inflation 4) GDP (growth) 1.a. Long-run growth sustainable growth 1.b. Fluctuations business cycle (short-run) Average growth rate: 2.5-3% How long will it take to double GDP at 3% growth rate? Rule of 70: 70/3=23 years What can account for long-term growth? o Population is #1 reason Current: 307m 2006: 300m 1967: 200m 1915: 100m 1870: 40m 1790: 4m (first census) o Labor productivity Average: 2.5% growth: 1949-1973 1.1% growth: 1973-1995 2.0% growth: 1995-2005 Business cycles o Short-run contractions and expansions o Explain why there are cycles o Boom: prices increase Unemployment o Great Depression: 25% o Current: 10% Inflation o Deflation: prices decrease o Inflation rate: % increase in level of prices
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Unformatted text preview: o Hyperinflation: extremely high inflation rate The international economy o Open: trade with other countries o Closed: doesnt trade with other countries o Trade imbalances Surplus: exports > imports Deficit: exports< imports o Most of years experienced trade surplus, after 1980s started to run a trade deficit. o Nov. 2009 trade balance: $36.4B (3% of GDP) o Keep running a trade deficit because we have a budget deficit. Large amounts of imports are for the government Macroeconomic policy o Fiscal policy: government spending and taxation o Monetary policy: Fed; money supply Major resource of government is taxes; typically runs a deficit (very high during war time) 1998-2001: budget surplus...
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ch1 - o Hyperinflation: extremely high inflation rate The...

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