Macro 12.pdf

2. Lecture 11 Macroeconomics

3. Opening Prayer

4. Quiz Master

5. Quiz 1.What is AS a function of? 2. Name 3 things that can shift AS to the left 3. Name 3 things that can shift AD to the right

6. In fl ation Rate P π AD Real GDP Growth Rate Y Shift Left - Decreasing Demand Slower Money Supply Growth (higher interest rates) Fear Reduced Wealth Higher Personal Taxes Lower Government Spending Decreased Export Growth Increased Import Growth Shift Right - Increasing Demand Faster Money Supply Growth (lower interest rates) Con fi dence Increased Wealth Lower Personal Taxes Higher Government Spending Increased Export Growth Decreased Import Growth

7. Real GDP Growth Rate In fl ation Rate π LRAS Shift Left - Losing Capitals Bad weather Higher oil price Tech slump Higher business taxes or regulations War, Earthquake, Pandemic Shift Right - Gaining Capitals Good weather Lower Oil Price Tech boom Lower business taxes or regulation Smooth production

8. Real GDP Growth Rate In fl ation Rate π LRAS AD

9. A D Real GDP Growth Rate Price Level AS Adam Smith Classical Model

10. A D 100 Price Level AS Adam Smith Classical Model Recession Unemployment Real GDP $6.50 $4.00 50

11. What if people don't want to change prices? Recession - Unemployment

12. Real GDP Growth Rate In fl ation Rate π AD LRAS SRAS

13. Father of Macroeconomics John Maynard Keynes (1883 - 1946) The GeneralTheory of Employment, Interest and Money The ideas of economists and political philosophers are more powerful than commonly understood; indeed the world is ruled by little else.

14. AD Price Level LRAS Adam Smith Neo-Classical Model Real GDP SRAS John Keynes

15. Short-Run Supply Curve Adrenaline Give 110% Push to exceed normal capacity

16. Long Run Run out of Adrenaline Fall back to normal Cannot do 110% forever

17. Real GDP Growth Rate In fl ation Rate π AD LRAS SRAS

18. Price Level Quantity of Output Two Supply Curves Short-Run Aggregate Supply Long-Run Aggregate Supply Price change does not affect the quantity of goods and services P

19. New Capital Human Physical Intellectual Price Level Quantity of Output Two Supply Curves LRAS 1 Y1 LRAS 2 Y3 LRAS 3 Y3

20. Great Depression 1929-1940 MV = PY M = Reduced V = Reduced P = Stuck Y = Reduced

22. Aggregate Supply Curve

23. Aggregate Demand Curve

24. Aggregate Supply Shift Left - Decreasing Demand Slower Money Supply Growth Fear Reduced Wealth Higher Personal Taxes Lower Government Spending Decreased Export Growth Increased Import Growth Shift Right - Increasing Demand Faster Money Supply Growth Con fi dence Increased Wealth Lower Personal Taxes Higher Government Spending Increased Export Growth Decreased Import Growth Left Shift Left - Losing Capitals Bad weather Higher oil price Tech slump Higher business taxes or regulations War, Earthquake, Pandemic Shift Right - Gaining Capitals Good weather Lower Oil Price Tech boom Lower business taxes or regulation Smooth production Aggregate Demand Right

25. π Y Quiz ADAS Modeling In fl ation Output Curve Direction Level Level 1. Good Weather 2. Slower Money Growth Rate 3. Lower Business Taxes 4. Decrease in Exports 5. New innovation 6. Lower electricity prices 7. Higher Personal Taxes 8. Earthquake AD Real GDP Growth Rate In fl ation Rate π LRAS SRAS

26. π Y Quiz ADAS Modeling In fl ation Output Curve Direction Level Level 1. Good Weather 2. Slower Money Growth Rate 3. Lower Business Taxes 4. Decrease in Exports 5. New innovation 6. Lower electricity prices 7. Higher Personal Taxes 8. Earthquake

27. AD Real GDP Growth Rate In fl ation Rate π LRAS SRAS

28. Mv = M + v = P

29. M V MV %∆M + %∆V 2012 100 3 300 2013 120 4 480 Chang e 20 1 180 Rate of 20% 33% 60% 53%

30. M + v = P M + v = In fl ation + Real 5% + 0% = In fl ation + 0%

31. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% -2% 0% 2% 4% 6% Aggregate Demand AD = M +V = P In fl ation Rate Y - Real GDP Growth Rate 5% = P +Y AD = 7%

32. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% -2% 0% 2% 4% 6% Aggregate Demand P In fl atio n Y - Real GDP Growth

33. %∆M + %∆V = 6% = %∆P + %∆Y 6% 6% 0% 0% %∆P In ation π %∆Y GDP Aggregate Demand

34. Two Supply Curves Long-Run

35. LRAS AD (M + v = 10%) P In fl ation Rate π Y Real GDP growth rate M + v = P + Y M + v = 10% = 7% + 3% If Real growth is 3%, and M is 10%, what is in fl ation? 3% 7% 11% 3% 7% -1%

36. LRAS1 AD (M + v = 10%) P In fl ation Rate π Y Real GDP growth rate M + v = P + Y 3% 7% 11% 3% 7% -1% LRAS2 LRAS3 New Capital Human Beings Ideas Human Physical Intellectual Financial Cultural Markets Entrepreneurs Innovations

37. LRAS1 AD (M + v = 10%) P In fl ation Rate π Y Real GDP growth rate M + v = P + Y 3% 7% 11% 3% 7% -1% New Capital Human Beings Ideas Human Physical Intellectual Financial Cultural Markets Entrepreneurs Innovations

38. Two Supply Curves Long-Run Short-Run

39. A D Real GDP Growth Rate Price Level AS Adam Smith Classical Model

40. A D 100 Price Level AS Adam Smith Classical Model Recession Unemployment Real GDP $6.50 $4.00 50

Macro 12.pdf

Macro 12.pdf

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