Economics 201, Witte, Tuesday, October 11, 2005
Exam Tuesday of next week, similar to old exams.
Bring a calculator.
It will cover everything since the first day.
Also, Krugman & Wells
1-8, Buchholz I-IV, VI-VIII, XI (p. 247-263).
We will announce
some extra office hours via e-mail and on Blackboard.
Old exams can
be found here:
Quiz this week Aplia Chapter 6 PS II, TA section:
diagram and shift of one curve.
(Mark Witte in Andersen 311, TAs in Andersen 328).
Mark W. Tuesday, 2:00-4:00 and Wednesday 9:30-11:30, Mark S.,
Monday, 10-noon, Tim Thursday, 4:30-6:30, Nenad Wednesday,
1:30-3:30, Jeff Thursday, 10-noon, in Andersen 328.
Malthus versus Ricardo
Population Growth versus Food Production Growth
a. Aggregate Demand Growing Faster than Aggregate Supply –
Oversaving and “General Gluts?”
Saving reduces spending below production, resulting
in gluts, unemployment.
The macroeconomy is flawed and
tends toward problems.
b. Say’s Law:
“Supply creates its own demand”, producing stuff,
creates income, which creates demand.
If we are in an equilibrium at some point where we
are in a macroeconomic equilibrium (total production = total
sales), why wouldn’t we stay in equilibrium, unless some
outside factor changes to mess things up (war, financial panic,
But then why do we see so many times of low
demand and high unemployment?
Aggregation of markets to the entire
The macroeconomy is all the markets in a nation, related group of
nations, or the world, considered together.
Analogies to microeconomics and supply and demand
Gross Domestic Product