Trade-offs, Comparative Advantage, and the Market System the Market System
Learning Objective 2.1
Production possibilities frontier (PPF ): A curve showing the maximum attainable combinations of two products that may be produced with available
Reference: Chapter 1 (p. 62-63)
What can you get from an Introductory Macro-economics course?
A. What is Macro-economics?
B. What can you get from an Introductory Macro-Economics courses?
A. What is Macro-eco
ECON 1002 Handout 2
Gross Domestic Product (GDP): Part 1 (Concept, Definition, Computation)
Since August 2010, China has become the second largest economy in the world
How do we measure the size of an economy?
(Refer to Current Issues: reading 1).
ECON 1002 Handout 3
Gross Domestic Product (GDP): Part 2 (Applications and limitations)
Chapter 8 (p. 294-302); Current Issues: Reading 2 and 3
WHAT INFORMATION CAN WE GET FROM THE GDP?
I. Does the composition of the GDP (expendit
Inflation / Deflation
Chapter 9 (p. 328-334)
Current Issues: Readings 4 & 5
What Information can we get from the Consumer Price Index?
The Consumer Price Index and Inflation/Deflation: Definition and
ECON 1002 Handout 5
Chapter 9 (p. 313-326) Text; Current Issues: Reading 6 & 7
After the Financial Tsunami, the unemployment rate increased immediately in the US, HK and
many other countries.
However, the unemployment r
Handout 6 Issues in Macro-economics
Reference in Text: Chapter 10 (p. 349 355, 366 - 374); Current Issues: Reading 8 and 9
In the World Economic Outlook, published in September 2011, the IMF made projections about the world economy (the f
ECON 1002 Handout 7
Economic Models and Analysis
A typical question in Micro-economics,
how is the price of a particular product, say orange, determined?
In reality, the price of orange can be determined by many factors.
There are so many factors in reali
Production Technology and the Labor Market;
Aggregate Supply Curve in the Classical Environment
p. 389-395 (Chapter 11, text), p. 473 474 (chapter 13 text)
What is the Price (P) and Output (Y) combination that repr
ECON 1002 Handout 10
Fiscal and Monetary Policies; the Aggregate Demand Curve
Reference: Chapter 13 (p. 465 - 473)
Current Issues: Reading 11, 12, 13
The current Debt Crisis in the US and the Euro area
Quantitative Easing and Operation Twist
ECON 1002 Handout 11
Determination of aggregate output (Y) and general price level (P) in a closed economy
Chapter 10 (p. 354 355), Chapter 13
ISSUES & OUTLINE
Determination of the aggregate output (Y) and the general
ECON 1002 Handout 12
Aggregate Supply in a Keynesian Model and Equilibrium in the Short-Run
Effectiveness of Fiscal and Monetary Policies: Why QE1, QE2, QE3?
The Keynesian Approach
References: Chapter 13 (p. 473 - 478)
I. Labor Market
The International Financial System
Learning Objective 18.1
Exchange Rate Systems
Floating currency The outcome of a country allowing its currencys exchange rate to be determined by demand and supply.
Exchange rate system An agreement among co
Macroeconomics in an Open Economy
Learning Objective 17.1
Open economy An economy that has interactions in trade or finance with other countries. Closed economy An economy that has no interactions in trade or finance with other countries. Balan
Short run fluctuations (Business cycle) Alternating periods of economic expansion and economic recession. Economic growth The ability of an economy to produce increasing quantities of goods and services. Some important gauges of macro performance i
Learning Objective 8.1
Current Population Survey (The Household Survey)
who do not have a job and who are not actively looking for a job are classified as not in the labor force.
Not available for work: Retirees, homemakers, full-time stu
Learning Objective 9.1
Long-run economic growth The process by which rising productivity increases the average standard of living.
The Growth in Real GDP per Capita, 19002006
Economic Growth, the Financial System, and Business Cycles
Learning Objective 10.1
Economic Growth Over Time and Around the World
Economic Growth from 1,000,000 B.C. to the Present
Average Annual Growth Rates for the World Economy
Long-Run Economic Growth: Sources and Policies
Learning Objective 11.1
The Aggregate Expenditure Model
Aggregate expenditure = Consumption + Planned investment + Government purchases + Net exports
Output and Expenditure in the Short Run
AE = C + planned investment +
Aggregate Demand and Aggregate Supply Analysis
Learning Objective 12.1
Aggregate demand and aggregate supply model A model that explains short-run fluctuations in real GDP and the price level. fluctuations in real GDP and the price level.
Learning Objective 12.1
Why Is the Aggregate Demand Curve Downward Sloping?
GDP has four components: consumption (C), investment (I), government purchases (G), and net exports (NX). If we let Y stand for GDP, we can write the following:
Y = C +
Money, Banks, and the Federal Reserve System
Learning Objective 13.1
What Is Money and Why Do We Need It?
Money Assets that people are generally willing to accept in ll exchange for goods and services or for payment of debts. Asset Anything o
Learning Objective 14.1
Monetary policy The actions the central bank takes to manage the money supply and interest rates to pursue its economic objectives rates to pursue its economic objectives. The Goals of Monetary Policy In
Learning Objective 15.1
What Fiscal Policy Is and What It Isnt Fiscal policy Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives, such as high employment, price stability, and high
Inflation, Unemployment, and Federal Reserve Policy
Learning Objective 16.1
Phillips curve A curve showing the short-run relationship between the unemployment rate and the inflation rate. unemployment rate and the inflation rate.
ECON 1002 A/B
Handout 13 A Combined Approach:
Keynesian in the Short-Run and General Equilibrium in the Long Run
Reference: Chapter 13 (p. 478 - 489)
I. Business Cycles and Stabilization Policies
II. Sub-Prime Crisis, Oil Shock, Stagflation and Sta