Week 9

May 25, 2010     Chapter 33: Inflation, Disinflation, and Deflation

• Chapter 33: Inflation, Disinflation, and Deflation
  • Money and Inflation
    • Money and Prices Revisited
    • Classical Model of the Price Level
  • Inflation Tax
    • seigniorage
    • Cost, real inflation tax
  • Hyperinflation - One Cause: seignoirage
  • The Logic of Hyperinflation
  • Brazil
  • Yugoslavia
  • Zimbabwe
• Day 17 PPT - Not Available yet
• Krugman's Chapter 33 PPT

• Chapter 34: Modern Macroeconomics
  • Classical Economics - A little look back
    • The Beginning of the Business Cycle
  
  
• Chapter 35: Open Economy Macroeconomics
  • Balance of Payments
    • Trade Balance, Current Account and Financial Account
  • Modeling Private International Capital Flows
    • Determinants of Private International Capital Flows
    • Twin Deficits
    • The Golden Age of Capital Flows
  • The Role of Exchange Rates
• Day 18 PPT - Apple's #1
• Krugman's Chapter 35 PPT

                 Week 8

May 18, 2010     Chapter 31: Monetary Policy continued and Chapter 32:Labor Markets and Unemployment

• REVIEW the Exam
• Chapter 31: Monetary Theory continued
  • Short Run versus Long Run Effects
    • Price level effect in the long run on Money Demand, interest rates return and higher costs decrease business firms' supply
  • Money Neutrality
• Chapter 32: Labor Markets and Unemployment
  • Three Types of Unemployment
  • Job Creation and Job Destruction
  • 1. Frictional
  • 2. Structural
  • 3. Cyclical
  • The Natural Rate of Unemployment
  • Unemployment and the business cycle
  • Okun's Law
• Day 15 PPT - Hyperinflation examples
• Thoughts and Questions - Hyperinflation and Fed Funds
• Krugman's Chapter 32 PPT

• Chapter 32: The Natural Rate of Unemployment
• Unemployment and the business cycle
• Okun's Law
• Labor Market "Rigidities"
  • Misperceptions
  • Sticky Wages
  • Menu Costs
• Phillips Curve
  • Phillips Curve - relationship between unemployment and the inflation rate
  • Short-run Phillips Curve
  • Long-run Phillips Curve - NAIRU
• Chapter 33: Inflation, Disinflation, and Deflation
  • Money and Inflation
• Day 16 PPT - Not Available yet
• Krugman's Chapter 33 PPT

                 Week 7

May 11, 2010     Chapter 30: Money, Banking, and the Federal Reserve System

• Chapter 30: Money, Banking, and the Fed
  • Monetary Role of Banks
  • What Banks Do
  • The Problem of Bank Run
  • The Required Reserve Ratio
  • Bank Regulation
  • Deposit Insurance
• Day 13 PPT - Notes on Money and Central Banks
• Krugman's Chapter 31 PPT

• Chapter 31: Monetary Theory
  • Opportunity Cost of Money - the "price" (interest rate)
  • Two Theories of Money Demand
    • Liquidity Preference Theory (Money Demand depends upon the interest rate)
      • Nominal versus Real Demand for Money
      • Shifts in the Demand for Money Curve: Price Level changes, Technology and Income Changes
    • Velocity Approach to Money Demand
      • Quantity Equation
      • Percentage Change Identity: %M + %V = %P + %Y
  • Two Models of Interest Rates? See the Box on page 758!
  • Monetary Policy and the interest rate
    • Contractionary Monetary Policy
    • Expansionary Monetary Policy
  • The Effects upon Aggregate Demand
    • Fighting a Recessionary Gap
    • Cooling an Inflationary Gap
  • Short Run versus Long Run Effects
    • Price level effect in the long run on Money Demand, interest rates return and higher costs decrease business firms' supply
  • Monetary Neutrality

                 Week 6

     HAPPY VACATION - No classes on Tuesday, May 4 or Thursday, May 6, 2010


    Mid-term Exam, Chapters 23 - 29 on Friday, May 7, 2010
                From 4 pm to 6 pm

                 Week 5

April 27, 2010     Chapter 29: Fiscal Policy

• Finish Chapter 29: Fiscal Policy
  • 1. The Basics
    • Taxes, Purchases, and Transfers
    • The Government Budget and Total Spending
    • Expansionary and Contractionary Policies
    • Lags in Fiscal Policy!
    • Day 5 PPT - Public Policies
  • 2. Fiscal Policy and the Multiplier
  • Government Spending versus Taxes and their Multiplier Effects
  • How Much Bank for the Buck?
  • Automatic Stabilizers
  • 3. The Budget Balance
    • Saving (Borrowing) by the Government
    • Cyclically Adjusted Budget Balance
  • Should the Budget be Balanced>?
  • 4. Long-Run Implications of Fiscal Policy
    • Deficits, Surpluses, and Debt
    • Problems With the Rising Government Debt
    • Deficits and Debt in Practice?
• Day 9 PPT - Not Available yet
• Krugman's Chapter 29 PPT

• REVIEW
• Chapter 30: Money, Banking, and the Fed
  • The Meaning of Money
    • What is Money?
    • The Role of Money
    • Types of Money
    • Measuring the Money Supply
  • Monetary Role of Banks
• Day 10 PPT - Not Available yet
• Krugman's Chapter 30 PPT

                 Week 4

April 20, 2010     Chapter 27: Aggregate Demand and Aggregate Supply continued

• Finish Chapter 27: AD-AS
  • The Multiplier
    • MPC - The Marginal Propensity to Consume
    • MPS - The Marginal Propensity to Save
    • Autonomous Aggregate Spending
• The AD-AS Model
• Short-run Macroeconomic Equilibrium
  • Shifts in SRAS - Short-Run Aggregate Supply
  • Stagflation
  • Shifts in Aggregate Demand: Short-Run Effects
• Long-Run Macroeconomic Equilibrium
  • Inflationary Gap
  • Recessionary Gap
• Are YOU ready for the test?
• Day 7 PPT - None made
• Krugman's Chapter 27 PPT

• Problem Set #2 done in class on April 20, 2010
• Chapter 28: Income and Expenditure
  • Consumer Spending
    • Consumption Function
    • Autonomous Consumption
    • MPC times income
    • Shifts in Consumption - Changes in Future Disposable Income
    • Changes in Aggregate Wealth
  • Investment Spending
  • Interest Rate and Investment Spending
  • Expectations
  • Inventories
  • The Paradox of Thrift
  • Bad Times in Buenos Aires
• Day 8 PPT - An Introduction to the Federal Reserve
• Krugman's Chapter 28 PPT

                 Week 3

April 13, 2010     Chapter 26: Saving and Investment continued

• Finish Chapter 26: Saving and Investment
  • The Market for Loanable Funds
    • Policy 1: Saving Incentives
• The Market for Loanable Funds - Continued
  • Policy 2: Investment Incentives
  • Policy 3: Government Budget Deficits and Surpluses
• U.S. Government Debt
• Day 5 PPT - Public Policies
• Special PPT - Government Budget Constraint

• Chapter 27: Aggregate Demand and Aggregate Supply
• Aggregate Supply Curve
  • In the Short-Run slopes upward
  • Wage contracts make wages "Sticky" causing the upward slope
  • Shifts in AS
  • Changes in Commodity Prices
  • Changes in Nominal Wages
  • Changes in Productivity
  • In the Long Run Aggregate Supply is vertical - Called Potential Output
  • From the short-run to the long-run
  • wages change affecting business costs which affect suppliers and shift short-run AS
• The Aggregate Demand Curve
  • Why the Aggregate Demand Slopes Downward
  • Wealth Effect
  • Interest Rate Effect
  • Why the Aggregate Demand Curve Shifts
  • Changes in Expectations
  • Changes in Wealth
  • Changes in the Stock of Physical Capital
  • Changes in Government Policies - Monetary and Fiscal Policy
• Day 6 PPT - Aggregate Demand Shifts and CPI (US)
• Krugman's Chapter 27 PPT

                 Week 2

April 6, 2010       Chapter 25: Long-Run Economic Growth

• Homework for next class - 3 goals, indicators and values for the U.S. AND China
• Read Chapter 25 about Long-run economic growth
• Productivity - A key determinant of a country's standard of living
  • Productivity is defined as output per worker
  • Capital per worker
  • Technology
  • Human Capital
• Diminishing Returns
• Solow Growth Model, as shown in class today
• Day 3 PPT - Solow Growth Model
• Krugman's Chapter 25 PPT