Tutorial_CHAP09Introduction to Economic Fluctuations(宏观经济学,曼昆)
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Chapter Nine 4
Many economists in business and government have the role of forecasting short-run fluctuations in the economy. One way that economists arrive at forecasts is through looking at leading indicators. Each month, the Conference Board, a private economics Research announces the index of leading economic indicators, which consists of 10 data series.
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®
CHAPTER 9 Introduction to Economic Fluctuations
A PowerPoint Tutorial
To Accompany
MACROECONOMICS, 6th. ed.
N. Gregory Mankiw By
Chapter Nine
Chapter Nine
2
GDP is the first place to start when analyzing the business cycle, since it is the largest gauge of economic conditions.
The National Bureau of Economic Research (NBER) is the official determiner of whether the economy is suffering from a recession. A recession is usually defined by a period in which there are two consecutive declines in real GDP.
Chapter Nine 3
In recessions, unemployment rises. This negative (when one rises, the other falls) relationship between unemployment and GDP is called Okun’s Law, after Arthur Okun, the economist who first studied it. In short, it is defined as: Percentage Change in Real GDP = 3.5% - 2 the Change in the Unemployment Rate If the unemployment rate remains the same, real GDP grows by about 3.5 percent. For every percentage point the unemployment rate rises, real GDP growth typically falls by 2 percent. Hence, if the unemployment rate rises from 5 to 8 percent, then real GDP growth would be: Percentage Change in Real GDP = 3.5% - 2 (8% - 5%) = - 2.5% In this case, GDP would fall by 2.5%, indicating that the economy is in a recession.
P
LRAS
Long Run
SRAS ine
9
Aggregate demand (AD) is the relationship between the quantity of output demanded and the aggregate price level. It tells us the quantity of goods and services people want to buy at any given level of prices. Recall the Quantity Theory of Money (MV=PY), where M is the money supply, V is the velocity of money, P is the price level, and Y is the amount of output. It makes the not quite realistic, but very convenient assumption that velocity is constant over time. Also, when interpreting this equation, recall that the quantity equation can be rewritten in terms of the supply and demand for real money balances: M/P = (M/P)d = kY, where k = 1/V is a parameter determining how much money people want to hold for every dollar of income. This equation states that supply of money balances M/P is equal to the demand and that demand is proportional to output. The assumption of constant velocity is equivalent to the assumption of a constant demand for real money balances per unit of output.
Mannig J. Simidian
1
Short-run fluctuations in output and employment are called the business cycle. In previous chapters, we developed theories to explain how the economy behaves in the long run; now we’ll seek to understand how the economy behaves in the short run.
Chapter Nine
6
Classical macroeconomic theory applies to the long run but not to the short run–WHY? The short run and long run differ in terms of the treatment of prices. In the long run, prices are flexible and can respond to changes in supply or demand. In the short run, many prices are “sticky” at some predetermined level. Because prices behave differently in the short run than in the long run, economic policies have different effects over different time horizons. Let’s see this in action.
AD Output (Y)
Chapter Nine
As the price level decreases, we’d move down along the AD curve. Any changes in M or V would shift the AD curve. Remember that the demand for real output varies inversely with the price level. Y = MV/P
Chapter Nine
5
1) Average workweek of production workers in manufacturing 2) Average initial weekly claims for unemployment insurance 3) New orders for consumer goods and materials adjusted for inflation 4) New orders, nondefense capital goods 5) Vendor performance 6) New building permits issued 7) Index of stock prices 8) Money-supply (M2) adjusted for inflation 9) Interest rate spread: the yield spread between 10-year Treasury notes and 3-month treasury bills 10) Index of consumer expectations
In recessions, both consumption and investment decline; however, investment (business equipment, structures, new housing and inventories) is even more susceptible to decline.
Chapter Nine 7
P
LRAS
P
LRAS
P
LRAS
SRAS AD Y Y Y
SRAS AD Y Y
SRAS AD Y
P
LRAS
P
LRAS
P
LRAS
SRAS AD Y Y Y
SRAS AD Y Y
SRAS AD Y
Chapter Nine
8
This macroeconomic model allows us to examine how the aggregate price level and quantity of aggregate output are determined in the short run. It also provides a way to contrast how the economy behaves in the long run and how it behaves in the short run.
Chapter Nine 10
The Aggregate Demand (AD) curve shows the negative relationship between the price level P and quantity of goods and services demanded Y. It is drawn for a given value of the money supply M. The aggregate demand curve slopes downward: the higher the price level P, the lower the level of real balances M/P, and therefore the lower the quantity of goods and services demanded Y. Price level
Many economists in business and government have the role of forecasting short-run fluctuations in the economy. One way that economists arrive at forecasts is through looking at leading indicators. Each month, the Conference Board, a private economics Research announces the index of leading economic indicators, which consists of 10 data series.
批注本地保存成功开通会员云端永久保存去开通
®
CHAPTER 9 Introduction to Economic Fluctuations
A PowerPoint Tutorial
To Accompany
MACROECONOMICS, 6th. ed.
N. Gregory Mankiw By
Chapter Nine
Chapter Nine
2
GDP is the first place to start when analyzing the business cycle, since it is the largest gauge of economic conditions.
The National Bureau of Economic Research (NBER) is the official determiner of whether the economy is suffering from a recession. A recession is usually defined by a period in which there are two consecutive declines in real GDP.
Chapter Nine 3
In recessions, unemployment rises. This negative (when one rises, the other falls) relationship between unemployment and GDP is called Okun’s Law, after Arthur Okun, the economist who first studied it. In short, it is defined as: Percentage Change in Real GDP = 3.5% - 2 the Change in the Unemployment Rate If the unemployment rate remains the same, real GDP grows by about 3.5 percent. For every percentage point the unemployment rate rises, real GDP growth typically falls by 2 percent. Hence, if the unemployment rate rises from 5 to 8 percent, then real GDP growth would be: Percentage Change in Real GDP = 3.5% - 2 (8% - 5%) = - 2.5% In this case, GDP would fall by 2.5%, indicating that the economy is in a recession.
P
LRAS
Long Run
SRAS ine
9
Aggregate demand (AD) is the relationship between the quantity of output demanded and the aggregate price level. It tells us the quantity of goods and services people want to buy at any given level of prices. Recall the Quantity Theory of Money (MV=PY), where M is the money supply, V is the velocity of money, P is the price level, and Y is the amount of output. It makes the not quite realistic, but very convenient assumption that velocity is constant over time. Also, when interpreting this equation, recall that the quantity equation can be rewritten in terms of the supply and demand for real money balances: M/P = (M/P)d = kY, where k = 1/V is a parameter determining how much money people want to hold for every dollar of income. This equation states that supply of money balances M/P is equal to the demand and that demand is proportional to output. The assumption of constant velocity is equivalent to the assumption of a constant demand for real money balances per unit of output.
Mannig J. Simidian
1
Short-run fluctuations in output and employment are called the business cycle. In previous chapters, we developed theories to explain how the economy behaves in the long run; now we’ll seek to understand how the economy behaves in the short run.
Chapter Nine
6
Classical macroeconomic theory applies to the long run but not to the short run–WHY? The short run and long run differ in terms of the treatment of prices. In the long run, prices are flexible and can respond to changes in supply or demand. In the short run, many prices are “sticky” at some predetermined level. Because prices behave differently in the short run than in the long run, economic policies have different effects over different time horizons. Let’s see this in action.
AD Output (Y)
Chapter Nine
As the price level decreases, we’d move down along the AD curve. Any changes in M or V would shift the AD curve. Remember that the demand for real output varies inversely with the price level. Y = MV/P
Chapter Nine
5
1) Average workweek of production workers in manufacturing 2) Average initial weekly claims for unemployment insurance 3) New orders for consumer goods and materials adjusted for inflation 4) New orders, nondefense capital goods 5) Vendor performance 6) New building permits issued 7) Index of stock prices 8) Money-supply (M2) adjusted for inflation 9) Interest rate spread: the yield spread between 10-year Treasury notes and 3-month treasury bills 10) Index of consumer expectations
In recessions, both consumption and investment decline; however, investment (business equipment, structures, new housing and inventories) is even more susceptible to decline.
Chapter Nine 7
P
LRAS
P
LRAS
P
LRAS
SRAS AD Y Y Y
SRAS AD Y Y
SRAS AD Y
P
LRAS
P
LRAS
P
LRAS
SRAS AD Y Y Y
SRAS AD Y Y
SRAS AD Y
Chapter Nine
8
This macroeconomic model allows us to examine how the aggregate price level and quantity of aggregate output are determined in the short run. It also provides a way to contrast how the economy behaves in the long run and how it behaves in the short run.
Chapter Nine 10
The Aggregate Demand (AD) curve shows the negative relationship between the price level P and quantity of goods and services demanded Y. It is drawn for a given value of the money supply M. The aggregate demand curve slopes downward: the higher the price level P, the lower the level of real balances M/P, and therefore the lower the quantity of goods and services demanded Y. Price level