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Unformatted text preview: Econ 102 Winter 2012 Lecture Note 1 - Measuring the Economy In this class, we will learn tools and methods to analyze the economy at the country and global level. We will use models of economies to study long-run growth rates, business cycles (alternating periods of economic growth and decline), and the recent global financial crisis. Some Useful Math First, we will make sure we agree on some mathematical notation, and then review some math concepts that we will use throughout the course. A variable X at time t will be denoted as X t . For example, the value of X in year 1985 will be represented by X 1985 . For the change in X t , we will use the notation X t , which will stand for X t X t- X t- 1 . In this class we wont be that particular about distinguishing between discrete and continuous time. For instance, we will use derivatives of X t with respect to time even when it is not clear that time is continuous. This is mainly a concern for purely math reasons, if it doesnt bother you we can just move on. 1 We will use the logarithm function throughout the course. Whenever you see log it means the natural logarithm (same for ln). Remember that log( Y t ) Y t = 1 Y t And so, by the chain rule, log Y t t = 1 Y t Y t t The numerator is the change in Y t and the denominator is Y t , so this is a proportional change in Y due to an incremental change in t . Well call this the growth rate of Y t . As stated in the syllabus, you should also be familiar with multivariate differential calculus, especially the topic of constrained maximization. Measuring the Economy Before we can explain how the macroeconomy works, we have to first agree on how to measure it....
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This note was uploaded on 02/06/2012 for the course ECON Econ102 taught by Professor D during the Spring '11 term at UCLA.
- Spring '11