321LecNote01Ch1

321LecNote01Ch1 - Instructor Kim H.H Spring 2011...

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Instructor : Kim, H.H. Intermediate Macro Analysis Spring 2011 Economics 01:220:321 1 Chapter 1. Science of Macroeconomics Important issues in macroeconomics What causes recessions? What is “government stimulus” and why might it help? How can problems in the housing market spread to the rest of the economy? What is the government budget deficit? How does it affect workers, consumers, businesses, and taxpayers? Important issues in macroeconomics Why does the cost of living keep rising? Why are so many countries poor? What policies might help them grow out of poverty? What is the trade deficit? How does it affect the country’s well-being? U.S. Real GDP per capita (2000 dollars)
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Instructor : Kim, H.H. Intermediate Macro Analysis Spring 2011 Economics 01:220:321 2 U.S. Inflation Rate (% per year) U.S. Unemployment Rate (% of labor force)
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Instructor : Kim, H.H. Intermediate Macro Analysis Spring 2011 Economics 01:220:321 3 Why learn macroeconomics? 1. The macroeconomy affects society’s well-being. 2. The macroeconomy affects your well-being. per cen t of lab or forc e crim es per 100, 000 pop ulati on U.S. Unemployment and Property Crime Rates Unemployment (left scale) Property crimes (right scale) -3 -2 -1 0 1 2 3 4 1965 1970 1975 1980 1985 1990 1995 2000 2005 -7 -5 -3 -1 1 3 unemployment rate inflation-adjusted mean wage (right scale) cha nge fro m 12 mo s earl ier per cen t cha nge fro m 12 mo s earl ier In most years, wage growth falls when unemployment is rising.
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Instructor : Kim, H.H. Intermediate Macro Analysis Spring 2011 Economics 01:220:321 4 3. The macroeconomy affects election outcomes. Economic models …are simplified versions of a more complex reality irrelevant details are stripped away …are used to show relationships between variables
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321LecNote01Ch1 - Instructor Kim H.H Spring 2011...

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