1Intro Macro N. Sheflin Assignment 3 NOTES: We’ll look at the basic Keynesianshort-run(SR) macro Aggregate Demand and Supplymodel and use it to introduce some of the key concerns of Macro, and look at the macro history of the U.S.. In later weeks we will examine the underpinnings of the model. DO NOT DEFINE MACRO AS STUDY OF ECONOMY AS A WHOLE, rather as the study of output/income determination for the economy, the overall level of prices and inflation, economic growth, and the role of monetary and fiscal policy Lots of material here – don’t panic, get the basics, ask questions. We’ll be using this all semester. We are skipping past chapter 6 on measuring GDP etc. We will come back to it once we have our basic model. IMPORTANT •skip/ignorethe material and graphs dealing with the long-run and long-run aggregate supply(LRAS) – we will come back to this later. Here we will just focus on the short-run (Keynesian) model. •Don’t worry too much about why the aggregate demand curve is downward sloping •Focus on shifts in aggregate demand and supply in the short-run •Do not worry too much about inflationary and recessionary gaps- these just refer to macro equilibrium positions above or below potential output So we will be working with short-run aggregate demand supply graphs like: INVESTMENT GAME BEGINS –GET INVESTMENT ROUND 0 handout from RESOURCES/ INVESTMENT GAME ADVISEMENT 1 – in class HOW TO DO THE ASSIGNMENT AND LEARN MACRO Learning economics (or math or biology) is not a matter of just reading the chapters like a novel. Here are some suggestions about effective ways to LEARNthe material for the long-haul, nad make it part of your stock of human capital. •First read this assignment to get an idea of what it’s about •Then skim through Key Points in the assignment to get an overview. •Look at the end of chapter summary and questions again to get an overview. •Now read the textbook chapter. Do notunderline or highlight or take notes. Put a check next to sections that are confusing. •Read the sections that gave you trouble more carefully, and post questions on the chat room (weeks 1-3) about material you are still weak on. •Skim the chapter again, concentrating on the whole story. Try to sketch some of the important graphs and use graphs to answer some of the big and other questions. •Read the additional material in the assignment and do any assigned applications.
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