FILE: 252N04.HTML
CLASS NOTES FOR ECONOMICS 252/WEEK 4 FALL
2005
DR. WILLIAM SHINGLETON
THIS WEEK IS AN
EXAM WEEK
:
FIRST EXAMINATION/THURSDAY
MATERIAL:
CHAPTERS
1 TO 7
NOTES
252.1, 252.2, AND 252.3
CHAPTER 8
IS NOT ON THIS EXAM
FORMAT
TIME LIMIT: 60 MINUTES
25 MULTIPLE CHOICE/ 3 POINTS EACH
25 POINT ESSAY
CLOSED BOOK
AND CLOSED NOTE EXAM
CALCULATORS
ARE PERMITTED.
DON’T FORGET TO CHECK THE QUESTION BANKS AND SAMPLE EXAMS
ON THE WEBSITE.
TUESDAY
FINISH MATERIAL FROM LAST WEEK
THIS WEEK’S TOPICS
EXCHANGE
RATE/2005SEP09 http://www.exchangerate.com/200plus_calculator.html?amount_from=1.00&calc_long_from_id=239&calc_long_to_id=43&Submit=Convert
$1.24
PER EURO
$1.84
PER BRITISH POUND
109.70
YEN PER DOLLAR
$0.85
US PER CANADIAN
BUSINESS CYCLE
PATTERNS
IN REAL GDP
EXPANSION/RECOVERY/GROWTH
EXPANSION
SINCE NOVEMBER 2001
POSSIBLE
RECESSION MARCH 2001 TO NOVEMBER 2001
RECESSION
TYPES
OF
STAGFLATION
JOBLESS GROWTH
FOCUS ON MANUFACTURING JOBS
46
SINCE 1790
WHAT GOES UP MUST COME DOWN
DON REGAN: 1982
USUALLY
SHORTER TIME THAN EXPANSION
LONG RUN GROWTH PATH NOT SMOOTH
PERSPECTIVES
STABLE
VS UNSTABLE EQUILIBRIUM
CLASSICAL THEORY
STABLE,
SELF CORRECTING SYSTEM
SAY'S
LAW
PROBLEMS
MELT AWAY
EQUILIBRIUM
=> FULL EMPLOYMENT
NO
NEED FOR GOVT INTERVENTION
BRITISH
GOLD STANDARD AND 1925 CRISIS
CHANCELLOR
OF THE EXCHEQUER,
WINSTON
CHURCHILL,
RETURNED
GOLD
PRICE AND MONEY SUPPLY
MONEY
SUPPLY AND DEMAND FOR GOODS
KEYNESIAN THEORY
CRASH
OF 1929 IN UNITED STATES
TOP
STUDENT: O.E. NIEMEYER
IN
THE LONG RUN WE ARE ALL DEAD
EQUILIBRIUM
CAN => UNEMPLOYMENT
UNSTABLE,
PROBLEMS CAN GROW
A
PROBLEM OF INFORMATION
PRODUCTION
TAKES TIME
THE
FUTURE IS UNCERTAIN
LONG
RUN UNEMPLOYMENT
EFFECTIVE
DEMAND
INVENTORY
OVERHANG
NEED
FOR GOVT INTERVENTION
MODEL FOR MACRO ECONOMY
AGGREGATE DEMAND/AGGREGATE SUPPLY
FRUIT
SALAD
AGGREGATE DEMAND
PRICE
LEVEL, NOT INFLATION RATE
REAL
GDP
SALES
= C + I + G + X - M
EXPLAIN
SHAPE OF CURVE
REAL
BALANCE EFFECT
FOREIGN
TRADE EFFECT
INTEREST
RATE EFFECT
AGGREGATE SUPPLY
PRICE
LEVEL, NOT INFLATION RATE
REAL
GDP
EXPLAIN
SHAPE OF CURVE
PROFIT
EFFECT
COST
EFFECT
AGGREGATE BALANCE (EQUILIBRIUM)
SUMMARIZE
THE WHOLE ECONOMY
NATURAL
RATE OF OUTPUT
COMPARE
TO FULL EMPLOYMENT OUTPUT
AT WHAT GDP DOES PRODUCTION = SALES?
STATIC
VS DYNAMIC
CAUSES OF SHIFTS
AGGREGATE
DEMAND
CONFIDENCE/EXPECTATIONS
POLICY
MONETARY
POLICY
AGGREGATE
SUPPLY
COST
TAXES/POLICY
CONFIDENCE
EFFECTS OF SHIFTS
INFLATION
EXPANSION
RECESSION
MULTIPLE
SHIFTS
POLICIES
FISCAL
MONETARY
SUPPLY-SIDE
TRADE
PUT IT ALL TOGETHER/REPEAT ANALYSIS
IS
THERE A “LONG-RUN” AGGREGATE SUPPLY?
EXPLAIN ADJUSTMENTS