assign8 - Intro Macro N. Sheflin ASSIGNMENT 8 NOTES: Price...

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I n t r o M a c r o N . S h e f l i n ASSIGNMENT 8 NOTES: Price Indices, Inflation and the Short-Run Phillips Curve A quick look at Price Indices, Deflating nominal variables to get real variables and, more importantly, SR Inflation and the Short-Run Phillips Curve. . This complete our first look at the SR Keynesian model of the economy. After the break we will turn to the LR Classical model and other issues, including economic growth, international economics, and more ONLINE MIDTERM EXAM - 40 Questions from assignments 1-7, 50 minutes, 26 hour ‘window’ in which to choose your 50 minutes, starting Wednesday 3/10 7pm ending Thursday 3/11 9pm . Anytime in that period, go to Sakai, under Tests and Quizzes click on Midterm and complete in one sitting, in no more than 50 minutes (ET students take the ET version of the Midterm) Investment Game, round 2 – More Stock READING Samuelson Chapter 5 – only the section on “Price Indices and Inflation” and chapter 16 Inflation – but omit the brief section on “Expectations and Inflation” and in the Phillips curve section, read ONLY the section on the “Short-Run Phillips Curve” for now. Also, look at the CPI at: http://www.bls.gov/news.release/cpi.nr0.htm and maybe And DeLong’s Inflation page: http://www.j-bradford-delong.net/multimedia/Inflation.html and Phillips curve http://www.j-bradford-delong.net/multimedia/USPCurve.html . WHERE WE ARE –OUTLINE OF KEY POINTS TO DATE AND WHY WE DID THINGS IN THE ORDER WE HAVE We started with an overview of economics and macroeconomics, turned to a quick review of basic economics and supply and demand framework. We then moved to macroeconomics with the short-run aggregate supply and demand model. We did SR first because we live in the short-run, are facing major short-run problems, and if we hadn’t started with the short-run, we would still have not mentioned recession, fiscal policy, etc. We then looked at GDP and other national income accounting ideas and then looked at the ‘old’ 45 degree line/Keynesian cross approach to the Keynesian model (underlies the aggregate Supply and Demand approach we will use for the rest of the course). Next we turned to money and then fiscal monetary policy. Now we are completing our first cut at SR macro, by looking at inflation in the short-run. see bottom of assignment for more KEY POINTS OF THIS WEEK The CPI is a fixed base year quantity price index and considered by some a cost-of-living index (although problems with this). The CPI can be used to track changes in prices of goods and services purchased for consumption by households, i.e., of the consumer basket . Typically an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one. CALCULATING THE CPI
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assign8 - Intro Macro N. Sheflin ASSIGNMENT 8 NOTES: Price...

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