Macroeconomics: overview

Сентябрь 6, 2022

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Macroeconomics: overview

Содержание

2. Lecture objectives How does the economy operate in short-run and in long-run? What are the main
3. Great Depression (1929-1933) fxstreet.com
4. US real GDP in perspective factandmyth.com
5. GDP fluctuations: US, XXth cent. McConnell & Brue
6. Business (economic) cycle Business cycle refers to the expansions and contractions in the economic activity (basically
7. US real GDP: key findings GDP ups and downs repeat in a cyclical way Yet, GDP
8. The essence of macroeconomics GDP behavior (both short-run and long-run) is at the heart of macroeconomic
9. Causes of economic cycles Spontaneous shifts in private spending Economic policy of government External shocks Disasters
10. Causes of long-run GDP increase Growing substance of production factors: labour, capital, technology.
11. Basic macroeconomic indicators GDP change (economic growth) Unemployment Inflation
12. Gross domestic product (GDP) GDP is the market value of the final goods and services produced
13. Economic growth rate Economic growth rate is the annual percentage change of real GDP.
14. Expanssion and recession Periods of positive real GDP growth are called expansions. Periods of negative real
15. Peak and through Periodic maximum of real GDP is called peak. Periodic minimum of real GDP
16. Business cycle model Time Real GDP Trough Expansion Peak Recession Trough Trend line (potential production)
17. GDP fluctuations and unemployment forbes.com
18. Poland: GDP growth (year on year) euro-dane.com.pl
19. Poland: unemployment rate euro-dane.com.pl
20. GDP fluctuations and unemployment (short-run model) GDP change and unemployment are inversely related: as GDP increases,
21. GDP fluctuations and inflation (short-run model) Decrease in GDP usually leads to lower inflation (long-lasting GDP
22. Economic growth and inflation: the case of Latvia 2005 and Japan 2001 LATVIA: Real GDP growth
23. Unemployment-inflation trade-off in short-run Recession is normally accompanied by rising unemployment, yet inflation decelerates. Expanssion is
24. Potential production vs. actual production: additional perspective Potential GDP is the value of real GDP that
25. „Economic overheating”: US economy during Vietnam War In the mid-1960s US economy was at full employment.
26. Summary: macroeconomic goals GDP growth Full employment Stable prices
27. Check point: true / false test The period of time during which real GDP increases in
28. Check point: interpretations
29. Lecture objectives How does economy operate in short-run and in long-run? What are the main indicators
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Слайд 2

Lecture objectives
How does the economy operate in short-run and in long-run?
What

are the main indicators of economic condition?
What is the centerpiece of macroeconomics?

Слайд 3

Great Depression (1929-1933)
fxstreet.com

Слайд 4

US real GDP in perspective
factandmyth.com

Слайд 5

GDP fluctuations: US, XXth cent.
McConnell & Brue

Слайд 6

Business (economic) cycle
Business cycle refers to the expansions and contractions in

the economic activity (basically – GDP) that take place over time. In other words it reflects changes in the actual production around the long-run trend.

Слайд 7

US real GDP: key findings
GDP ups and downs repeat in a

cyclical way
Yet, GDP permanently increases
TWO PERSPECTIVES:
short-run: temporary GDP fluctuations
long-run: sustainable GDP increase

Слайд 8

The essence of macroeconomics
GDP behavior (both short-run and long-run) is at

the heart of macroeconomic analyses.
The issue is of special importance because of its influence on the standard of living and negative results of its decline.

Слайд 9

Causes of economic cycles
Spontaneous shifts in private spending
Economic policy of government
External

shocks
Disasters of any kind

Слайд 10

Causes of long-run GDP increase
Growing substance of production factors:
labour,
capital,
technology.

Слайд 11

Basic macroeconomic indicators
GDP change (economic growth)
Unemployment
Inflation

Слайд 12

Gross domestic product (GDP)
GDP is the market value of the final

goods and services produced within a country in a given time period (typically one year).

Слайд 13

Economic growth rate
Economic growth rate is the annual percentage change of

real GDP.

Слайд 14

Expanssion and recession
Periods of positive real GDP growth are called expansions.
Periods

of negative real GDP growth are called recessions (more precisely – recession means that real GDP falls for at least two succesive quarters).

Слайд 15

Peak and through
Periodic maximum of real GDP is called peak.
Periodic minimum

of real GDP is called through.

Слайд 16

Business cycle model
Time
Real GDP
Trough
Expansion
Peak
Recession
Trough
Trend line (potential production)

Слайд 17

GDP fluctuations and unemployment
forbes.com

Слайд 18

Poland: GDP growth (year on year)
euro-dane.com.pl

Слайд 19

Poland: unemployment rate
euro-dane.com.pl

Слайд 20

GDP fluctuations and unemployment (short-run model)
GDP change and unemployment are inversely

related: as GDP increases, unemployment drops (and vice versa).
This type of unemployment is known as cyclical.

Слайд 21

GDP fluctuations and inflation (short-run model)
Decrease in GDP usually leads to

lower inflation (long-lasting GDP downturn implies deflation).
Increase in GDP usually leads to higher inflation.

Слайд 22

Economic growth and inflation: the case of Latvia 2005 and Japan

2001
LATVIA:
Real GDP growth rate: ≈ 9% (EU record)
inflation rate: ≈ 7% (EU record)
JAPAN:
Real GDP growth rate: -0,7%
inflation rate: -1,6%

Слайд 23

Unemployment-inflation trade-off in short-run
Recession is normally accompanied by rising unemployment, yet

inflation decelerates.
Expanssion is normally accompanied by declining uneployment, yet inflation accelerates.

Слайд 24

Potential production vs. actual production: additional perspective
Potential GDP is the value

of real GDP that would exist if all resources in the economy were fully and efficiently employed.
Production at potential output level means that the economy achieves full employment.

Слайд 25

„Economic overheating”: US economy during Vietnam War
In the mid-1960s US economy

was at full employment.
Johnsons administration accelerated military spending for Vietnam while simultaneously increasing expenditures on domestic „war on poverty” programs.
The result was double-digit inflation of the 1970s.

McConnell & Brue

Слайд 26

Summary: macroeconomic goals
GDP growth
Full employment
Stable prices

Слайд 27

Check point: true / false test
The period of time during which

real GDP increases in named economic peak
It is possible to produce more than potential output (actual production > potential production)
In short-run inflation is independent of economic growth and unemployment
Economic growth rate cannot be negative
In business cycle each through is followed by economic downturn

Слайд 28

Check point: interpretations

Слайд 29

Lecture objectives
How does economy operate in short-run and in long-run?
What are

the main indicators of economic condition?
What is the centerpiece of macroeconomics?

Macroeconomics: overview

Содержание

Lecture objectivesHow does the economy operate in short-run and in long-run?What

Great Depression (1929-1933)fxstreet.com

US real GDP in perspectivefactandmyth.com

GDP fluctuations: US, XXth cent.McConnell & Brue

Business (economic) cycleBusiness cycle refers to the expansions and contractions in

US real GDP: key findingsGDP ups and downs repeat in a

The essence of macroeconomicsGDP behavior (both short-run and long-run) is at

Causes of economic cyclesSpontaneous shifts in private spendingEconomic policy of governmentExternal

Causes of long-run GDP increaseGrowing substance of production factors:labour,capital,technology.

Basic macroeconomic indicatorsGDP change (economic growth)UnemploymentInflation

Gross domestic product (GDP)GDP is the market value of the final

Economic growth rateEconomic growth rate is the annual percentage change of

Expanssion and recessionPeriods of positive real GDP growth are called expansions.Periods

Peak and throughPeriodic maximum of real GDP is called peak.Periodic minimum

Business cycle modelTimeReal GDPTroughExpansionPeakRecessionTroughTrend line (potential production)

GDP fluctuations and unemploymentforbes.com

Poland: GDP growth (year on year)euro-dane.com.pl

Poland: unemployment rateeuro-dane.com.pl

GDP fluctuations and unemployment (short-run model)GDP change and unemployment are inversely

GDP fluctuations and inflation (short-run model)Decrease in GDP usually leads to