LEC I & II Macro

LEC I&amp II - Economics of Global Business Macro Module Lectures I II Introduction to National Income Accounts PROF SRIVATSAN 1 Macroeconomic

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PROF SRIVATSAN 1 Economics of Global Business Introduction to National Income Accounts
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PROF SRIVATSAN 2 Macroeconomic Goals Macroeconomic Goals Microeconomic Behavior of individual decision makers and individual markets Macroeconomic Broad outlines of the economy 1. Economic growth 2. Full employment 3. Stable prices
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PROF SRIVATSAN 3 Economic Growth Economic Growth Increase in production of goods and services Real GDP Total quantity of goods and services produced in a country over a year Increasing faster than the population Over long periods of time Small differences in growth rates can cause huge differences in living standards
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PROF SRIVATSAN 4 Economic Growth Economic Growth 4
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PROF SRIVATSAN 5 High Employment/Low Unemployment High Employment/Low Unemployment Joblessness People who cannot find jobs - loss of income Economy is not achieving its full economic potential Unemployment rate Percentage of the workforce that is searching for a job but hasn’t found one
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PROF SRIVATSAN 6 U.S. Unemployment Rate, 1920–2006 U.S. Unemployment Rate, 1920–2006
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PROF SRIVATSAN 7 Employment and the Business Cycle Employment and the Business Cycle Firms produce more Hire more workers Firms produce less Lay off workers Business cycles Fluctuations in real GDP around its long-term growth trend
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PROF SRIVATSAN 8 Employment and the Business Cycle Employment and the Business Cycle Expansion A period of increasing real GDP Contraction A period of declining real GDP Recession A contraction of significant depth and duration Depression An unusually severe recession
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PROF SRIVATSAN 9 The Business Cycle The Business Cycle Time Real GDP Expansion Recession Expansion Long-run upward trend of real GDP The business cycle fluctuation of actual output around its long- run trend.
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PROF SRIVATSAN 10 U.S. Annual Inflation Rate, 1922–2006 U.S. Annual Inflation Rate, 1922–2006 10
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PROF SRIVATSAN 11 Stable Prices Stable Prices With very few exceptions, inflation rate has been positive During 1990s Inflation rate - less than 3% per year A low inflation rate - important macroeconomic goal Inflation is costly to society
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PROF SRIVATSAN 12 The Macroeconomic Approach The Macroeconomic Approach Understand how the entire economy behaves Aggregation Combine different things into a single category Treat them as a whole
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PROF SRIVATSAN 13 Production and GDP
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This note was uploaded on 11/07/2010 for the course ECON 0001 taught by Professor Kitsikopoulos during the Spring '08 term at NYU.

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LEC I&amp II - Economics of Global Business Macro Module Lectures I II Introduction to National Income Accounts PROF SRIVATSAN 1 Macroeconomic

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