a Mitchell Pape 3 éve
407
Macroeconomics
The interaction between supply and demand establishes market equilibrium, determining the optimal price level. The law of demand dictates that as prices decrease, the quantity demanded increases, and vice versa.
Megnyitás
intersection of AD/AS = equilibrium price level and real output changing reserve ratio changes amount of excess reserve restrictive monetary policy changes size of monetary supply expansionary monetary policy isolation from political pressure speed and flexibility Money Creation fractional reserve system excess reserve 9actual reserve - required reserve) reserve ratio (>20%) required reserve monetary policy transactions demand for money Asset Demand for Money bank transactions to create money 7. buying government security 6. granting a loan 5. clearing a check drawn against the bank 4. depositing reserves in a Fed Reserve bank 3. accepting deoposits 2. acquiring property and equipment 1. create a bank tools of monetary supply Selling securities open market operations Monetary multiplier interest yield bond/interest rate interest Money Purchasing power $V- 1/P Money M2 M1 + savings deposits, including MMDA + small denominated time deposits +MMF held by individuals Federal Reserve Banks Liabilities federal reserve notes outstanding treasury deposits reserves to commercial banks Assets loans to commercial banks securities Fed Functions controlling the money supply acting as a fiscal agent supervising banks lending to financial solutions proving for check collections setting reserve requirements issuing currency Financial Services industry investment banks mutual fund companies security funds thrifts insurance companies commercial banks Money M1 currency + all checkable deposits Problems with Fiscal Policy political consideration (using policies to boost votes) offsetting local/state finances Timing operational lag (seeing effects) administrative lag (getting policy) recognition lag 9seeing what's happening) Future policies/ reversals Contractionary FP - gov't spending, + taxes decrease aggregate demand when demand-pull inflation occurs Expansionary FP + gov't spending, - taxes raise real gdp when recession occurs increased taxes less government spending Budget Surplus Budget Deficit less taxes increased government spedning Fiscal Policy built in stabilizers tax systems Regressive: rate falls as GDP falls Proportional: rate stays the same as GDP rises progressive: avg rate= tax revenue/ GDP Public Goods Quasai- Public Goods nonrivalry nonexcludability "Free Rider Problem" externality Government time horizons short run input is fixed and output may vary long run input and output are variable immediate short run input and output prices are fixed Factors that shift the AS curve price of imported goods Legal- Institutional environment productivity input prices expected returns personal taxes consumer wealth expectations borrowing Factors that shift the AD curve net export spending investment spending consumer spending government spending Downward sloping because: foreign purchases effect interest rate effect real balance effect Supply- side shocks (changes in resource prices, political events, natural disasters, new technology) Demand- side shocks (taxes, unemployment, financial instability) Phases Expansion Trough Recession peak =Unemployed/Work Force Work Force= 16+, not in jail, not in active service, not retired, actively searching for a job Types of Unemployment Cyclical: Unemployed because of less spending Frictional: Those looking for a new job Structural: difficult to find new jobs without retrain, relocate, etc Phillip's Curve inverse relationship between unemployment and inflation Multiplier effect= change in GDP/ initial change in spending GDP per capita= GDP/population Economic Growth approx # of years to double real GDP modern economic growth increase GDP over time increasing returns economic scale determinates of growth supply factors demand factors efficiency factors Calculating GDP Expenditures approach. COGS Income Approach Nominal GDP In Current U.S. $'s Real GDP Inflexible "sticky prices." Causes fluctuations in GDP Nominal GDP/ price index Adjusts for inflation GDP (Gross Domestic Product) Types of Markets Traditional: Relies on customs, religion, etc. Market: Consumers choose what they buy (invisible hand) Mixed: Mix of Command and Market Command: Government determines how things are made/sold Equilibrium- Where supply and demand intersect. Where the price is right change in technology change in resource costs change in price of other goods change in taxes Change in number of sellers change in producer expectations Supply failures Producer Surplus what producers are willing to get paid vs what they actually get paid Law of Supply As price falls, quantity supplied falls As price rises, quantity supplied rises Demand Failure Consumer surplus what consumers are willing to pay vs what they actually pay Determinates change in # of consumers change in consumer tastes change in price of related goods change in income change in consumer expectations Law of Demand As price falls, quantity demanded rises as price rises, quantity demanded falls Demand: amount consumers are able/willing to buy at given price Supply: amount producers are able/willing to sell at given price money income 9wayes, rent, interest, profit, etc) resources- factors of production (land, labor, capital, entrepreneurial) costs (labor, PPE, etc) resources goods and services revenue (cash, credit, crytocurrency, etc) consumption expenditure Resource Market Unemployment business/firm/producer buy resources, sell products Goal: Maximize profit individual/household/consumer sell resources, buy products Goal: Maximize utility Product Market Aggregate Supply Main topic Aggregate Demand The Business Cycle households buy/ business sell scarcity "No free lunch Opporutnity costs trade offs Supply and Demand Markets: Where buyers and sellers come together to exchange goods and services
