notes_macro_ch4

notes_macro_ch4 - Macro Notes G.Karras 2011 MACROECONOMICS...

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Unformatted text preview: Macro Notes G.Karras 2011 MACROECONOMICS Georgios Karras* University of Illinois at Chicago * Professor of Economics; Mailing Address: Department of Economics, University of Illinois at Chicago, 601 S. Morgan St., Chicago, IL 60607-7121; e-mail: gkarras@uic.edu . Lecture Draft Do not cite without permission Macro Notes G.Karras 2011, p.2 4 THE GOODS AND SERVICES MARKET 4.1. The Equilibrium Relationship Equilibrium (in general): Supply = Demand Macro Goods and Services: Production = Expenditure Algebraically: Y = C + I + G + NX Macro Notes G.Karras 2011, p.3 Assume (for now): closed economy. Two versions: Strong version: EX = IM = 0 NX = 0 Weak version: EX = IM NX = 0 So, Equilibrium: S I G C Y I G I C Y S Saving National because S S S G T C T Y G C Y G P S S G P Macro Notes G.Karras 2011, p.4 4.2. Saving. Main Determinants: Factor #1: Real interest rate: r ( ) S P ( ) S ( ) Saving curve has a positive slope : S r S 7 % 3 % $ 4 0 0 b $ 9 0 0 b Macro Notes G.Karras 2011, p.5 Macro Notes G.Karras 2011, p.6 Macro Notes G.Karras 2011, p.7 Macro Notes G....
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This note was uploaded on 10/07/2011 for the course ECON 221 taught by Professor Georgioskarras during the Fall '10 term at Ill. Chicago.

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notes_macro_ch4 - Macro Notes G.Karras 2011 MACROECONOMICS...

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