Summary
Samenvatting macroeconomics
- Course
- Institution
- Book
macroeconomics economics and business economics
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Seller
Follow
suzevandervlugt
Reviews received
Content preview
MacroeconomicsGdp is the value of final goods and services produced in the economy during a given period
Sometimes gdp as total income
Nominal gdp: sum of quantities of final goods produced times their current prices
Real gdp: sum of quantities of final goods times constant prices
Gdp growth: rate of growth of real gdp
>0 expansion <0 recession
Short run (few years): output is determined by how much is needed: demand factors
Medium run (a decade): output is determined by how much can produce: supply factors
Long rung (a few decades): output is determined by factors that lead to a sustained increase
Consumption + investment + government + export - Import + inventory investment
C + I + G + X - IM + INV
Inventory investment: produce more than needed in a given year INV=0 production – sales
Total demand: z= C+I+G+X-IM
Inv is not included because inv is involuntary, firms cannot anticipate sales accurately
Consumption: c0+c1Y
Disposable income: Y=y-T
C1 (slope) is propensity to consume: the effect of an additional dollar of y on c
C0 (intercept) autonomous consumption: the level of consumption
T and G capture fiscal policy: the choice of taxes and spending
g=t balanced budget g>t budget defict g<t budget surplus
economy is closed and produces a single good
Firms are willing to supply any amount of the good given at p
So output is determined by demand
Equilibrium condition: supply Y= demand Z
Multiplier >1 an increase in output that is larger than the initial shift in demand
Multiplier effect: demand ↑ → production ↑ →income ↑ → consumption ↑ → en door tot y*
Private saving: S=Yd-C
Public saving; T-G
Equilibrium: Investment = saving, production = demand
Inflation rate: rate at which the price level increases. distortions
Measure: -gdp deflator: the price level associated with aggregate output. produced
Nominal GDP is equal to the GDP deflator times real GDP
-consumer price index cpi. consumed
, Net exports or trade balance X-IM
Endogenous: Some variables depend on other variables in the model
Exogenous: independent, a bar
Production depends on demand, which depends on
income, which is itself equal to production
Lecture 2
Still supply is unlimited at a fixed price level
Investment depends on the borrowing cost/ interest rate
Interest rate is determined by money demand and money supply.
Money are assets that can be used directly to make transactions
-Currency (𝑪𝑼): paper money and coins.
-Checkable deposit (𝑫): the bank deposits on which people can write checks/ use a debit card
Money supply (𝑴𝒔) = currency (𝑪𝑼) + checkable deposits (𝑫)
Monetary policy is about the central bank’s control over money supply.
Central bank: the institution responsible for the conduct of monetary policy in a country.
Monetary base: 𝐵 = 𝐶 + 𝑅 = Currency + Bank reserves
Monetary base is called high-powered money or central bank money
Multiplier effect because banks can create money
Money supply (𝑀%) is affected by
● Monetary base (𝐵 = C + R)
- Currency (𝐶)
- Reserve (𝑅)
● Money multiplier (𝑚 = 𝑐𝑟 + 1 /𝑐𝑟 + 𝑟𝑟 )
- Reserve-deposit ratio (𝑟𝑟)
- Currency-deposit ratio (𝑐𝑟)
Methode 1: central bank can conduct open market operations (buying or selling bonds)
Buy bonds →money goes to eco → increase R and Ms
Methode 2: central bank can lend reserves to banks
Bank increases lending rate, fewer banks borrow→ reducing R and Ms
Methode 3: central bank can control reserve requirements
Increase in reserved requirements raises rr and MS
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller suzevandervlugt. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.44. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77512 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 15 years now