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Summary EC1002 Introduction to Economics - Part 4: Macroeconomics

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  • Course
  • EC1002 - Introduction to Economics (EC1002)
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  • University Of London
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  • Economics

Part 4 of detailed summary of EC1002 - Introduction to Economics, based on the textbook 'Economics' by Begg, Fischer, Vernasca and Dornbusch (11th edition). Beginner level, for introductory economics course. Part 4 includes chapters 15-25 and 28, namely: GDP and aggregate demand - IS-LM model - AS-...

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  • Chapters 15-25 and chapter 28
  • December 16, 2018
  • 111
  • 2017/2018
  • Summary

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  • introduction to economics
  • economics

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INTRODUCTION TO
ECONOMICS
- Part 4: Macroeconomics -




Good luck studying!


short manual:
- includes a graph
- includes a schema/diagram
- includes an introduction
- includes additional information that
is not in the main textbook updated: 23/03/2018

, CONTENTS
CHAPTER 15: INTRODUCTION TO MACROECONOMICS
15.1. The scope of macroeconomics …………………………………………………….. 1
15.2. Some facts about economic history ……………………………………………… 2
15.3. The circular flow ………………………………………………………………………….. 3
15.4. National income accounting
15.4.1. GNP and GDP, value added, final and intermediate goods 4
15.4.2. Investments and savings, leakages and injections,
inventories …………………………………………………………………… 5
15.4.3. Taxation and government spending, imports and exports 6
15.4.4. Circular flow revisited; problems in measuring GDP ……… 7
15.5. Nominal GDP, real GDP, GDP deflator; shadow economy ……………. 8
15.6. Problems of measuring GDP comprehensively ……………………………. 9

CHAPTER 16: OUTPUT AND AGGREGATE DEMAND
16.1. Potential and actual output; economic history ……………………………. 10
16.2. Consumption and investment demand ……………………………………….. 11
16.3. Aggregate demand and short-run equilibrium …………………………….. 12
16.4. Planned saving equals plan investment ……………………………………….. 13
16.5. Inflationary, deflationary and output gaps ………………………………….. 14
16.6. Effects of autonomous investment change …………………………………. 15
16.7. Effects of autonomous consumption change: paradox of thrift …… 16
16.8. The role of confidence ………………………………………………………………… 17

CHAPTER 17: FISCAL POLICY AND FOREIGN TRADE
17.1. The scope of government activity ………………………..……………………… 18
17.2. Government and aggregate demand …………………………………………… 19
17.3. The effects on output; balanced budget multiplier ………………………. 20
17.4. Japan and lessons ………………………..………………………..……………………. 21
17.5. The government budget
17.5.1. Introduction ………………………..……………………………………….. 22
17.5.2. Types of government budget ………………………………………… 23
17.6. Stabilizers of AD and limits to fiscal policy …………………………………… 24
17.7. Debt-to-GDP ratio ………………………..……………………………………………… 25
17.8. Foreign trade
17.8.1. Trends and effects on aggregate demand …………………….. 27
17.8.2. Multiplier and effects of changes in exports and imports . 28
17.8.3. Macroeconomic analysis; interconnection ……………………. 29

, CONTENTS
CHAPTER 18: MONEY AND BANKING
18.1. Money: definition, functions and kinds ……………………………………….. 30
18.2. Fundamental terms and bank’s accounts …………………………………….. 31
18.3. Narrow and broad money, multipliers; UK measures of money ….. 32
18.4. Cost of holding money and motives to hold money …………………….. 33
18.5. Demand for money and its determinants ……………………………………. 34
18.6. Financial panic, types of crises and global financial crisis 2007 …….. 36

CHAPTER 19: INTEREST RATES AND MONETARY TRANSMISSION
19.1. Central bank, Bank of England, repos and reverse repos …………….. 37
19.2. Means of monetary policy …………………………………………………………... 38
19.3. Central bank as lender of last resort and prudential regulation …… 39
19.4. Monetary control and quantitative easing ……………………………………. 41
19.5. Targets and instruments of monetary policy ……………………………….. 42
19.6. Transmission mechanism
19.6.1. Essence …………………………………………………………………………. 43
19.6.2. Effects on consumption demand …………………………………… 44
19.6.3. Effects on investment demand ……………………………………… 46
19.6.4. Channels of monetary policy and summary of TM ………… 47

CHAPTER 20: MONETARY AND FISCAL POLICY
20.1. Monetary policy ………………………………………………………………………….. 48
20.2. IS-LM model ………………………………………………………………………………… 49
20.3. IS-LM model in action ………………………………………………………………….. 50
20.4. Fiscally challenged EU countries ………………………………………………….. 51
20.5. Policy mix
20.5.1. Variations ……………………………………………………………………… 52
20.5.2. Determinants ……………………………………………………………….. 53
20.6. Ricardian equivalence …………………………………………………………………. 54




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, CONTENTS
CHAPTER 21: AS-AD MODEL
21.0. Introduction to AD and AS ……………………………..……………………………. 55
21.1. Aggregate demand
21.1.1. Introduction ……………………………..…………………………………… 56
21.1.2. II schedule ……………………………..………………………………………. 57
21.1.3. AD schedule ……………………………..…………………………………… 58
21.1.4. Graphs and algebra ……………………………..……………………….. 59
21.2. Aggregate supply ……………………………..…………………………………………. 60
21.3. Output gaps and Taylor’s rule ……………………………………………………… 61

CHAPTER 22: INFLATION
22.1. A brief history, pure inflation and quantity theory of money ………. 62
22.2. Fisher hypothesis and flight from cash ……………………..…………………. 63
22.3. Financing government debt; seigniorage and inflation tax ………….. 64
22.4. NRU and NAIRU; short-run and long-run Phillips curve ……………….. 65
22.5. Accelerationist hypothesis ……………………..…………………………………… 66
22.6. Inflation costs ……………………..………………………………………..…………….. 67
22.7. Deflation ……………………..………………………………………..……………………. 69
22.8. Incomes policy, types of inflation and institutional reform ………….. 70

CHAPTER 23: UNEMPLOYMENT
23.1. History of UK unemployment; key terms; labour market flows ……. 71
23.2. Measures of unemployment ………..……………………………………………… 72
23.3. LF and AJ schedule; lump-of-labour fallacy ………..……………………….. 73
23.4. Types of unemployment ………..…………………………………………………… 74
23.5. Long-term causes of unemployment changes …………………………….. 75
23.6. Cyclical unemployment fluctuations ………..…………………………………. 77
23.7. Policies against unemployment ………..………………………………………… 78
23.8. Costs and benefits of unemployment with evaluation …………………. 79
23.9. Hysteresis ………..………………………………………………………………………... 80




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