SRKEYNESIANCLASS - 1 Short-Run Keynesian Model& Business...

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Unformatted text preview: 1 Short-Run Keynesian Model & Business Cycles ¡ Business Cycles – Economic Fluctuations ¡ Economic Indicators ¡ The Recent Recession 1 ¡ The Keynesian SR Model ¢ Aggregate Demand & Expenditure ¢ Equilibrium and 45 degree line/Keynesian cross analysis ¢ Multiplier ¢ Consumption, Saving, Investment ¢ Fiscal Policy In the News? 2 Designed by Foster & Partners, a firm known for feats of technological wizardry, the city, called Masdar, would be a perfect square, nearly a mile on each side, raised on a 23-foot-high base to capture desert breezes. Beneath its labyrinth of pedestrian streets, a fleet of driverless electric cars would navigate silently through dimly lit tunnels. The project conjured both a walled medieval fortress and an upgraded version of the Magic Kingdom’s Tomorrowland. Course Issues ¢ Gradebook ¢ Consump Func ¢ Clicker update / prize ¢ Chat Rooms – use them 3 them ¢ ODE ¢ Clicker reg ¢ Investment Game ¢ Resume 2 About Business Cycles ¡ Economic Fluctuations rather than cycles – irregular, not periodic ¡ 10 in post WWII NBER ¢ Average contraction 10 mos, expansion 57 mos ¡ Chronology: ¢ stock prices and other leading indicators 6-12 mos ¢ Decline in investment and aggregate demand ¢ Increase in inventories (unintended) ¢ Decline in gdp 4 ¢ Decline in employment, prices, interest rates, profits, but generally not wages Causes? ¡ Keynesian – Demand shocks – Investment related ¢ Propagated By Internal Dynamics – multiplier accelerator model ¡ Shocks? ¢ Inappropriate monetary policy ¢ Financial Crises ¢ Supply-side/Technological ¡ Exogenous causes versus endogenous dynamics 5 (multiplier accelerator) ¡ Discredited Business Cycle Theories Economic Waves ¢ Kitchin inventory 3–5 years ¢ Juglar fixed investment7–11 years...
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This note was uploaded on 02/08/2011 for the course ECONOMICS 220:103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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SRKEYNESIANCLASS - 1 Short-Run Keynesian Model& Business...

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