tailieunhanh - Lecture Macroeconomics: Lecture 28 - Prof. Dr.Qaisar Abbas

This chapter presents the following content: The science of macroeconomics; the data of macroeconomics- GDP, unemployment & inflation; national income: where it comes from and where it goes; economic growth; money and inflation;. | 1. The Fed can control the money supply with open market operations the reserve requirement the discount rate 2. Portfolio theories of money demand stress the store of value function posit that money demand depends on risk/return of money & alternative assets Review of the previous lecture 1 3. The Baumol-Tobin model is an example of the transactions theories of money demand, stresses “medium of exchange” function money demand depends positively on spending, negatively on the interest rate, and positively on the cost of converting non-monetary assets to money Review of the previous lecture 2 Lecture 28 Review of the previous lectures Instructor: Prof. Dr. Qaisar Abbas 3 This chapter sets up the IS-LM model, which chapter 11 then uses extensively to analyze the effects of policies and economic shocks. This chapter also introduces students to the Keynesian Cross and Liquidity Preference models, which underlie the IS curve and LM curve, respectively. If you would like to spend less time | 1. The Fed can control the money supply with open market operations the reserve requirement the discount rate 2. Portfolio theories of money demand stress the store of value function posit that money demand depends on risk/return of money & alternative assets Review of the previous lecture 1 3. The Baumol-Tobin model is an example of the transactions theories of money demand, stresses “medium of exchange” function money demand depends positively on spending, negatively on the interest rate, and positively on the cost of converting non-monetary assets to money Review of the previous lecture 2 Lecture 28 Review of the previous lectures Instructor: Prof. Dr. Qaisar Abbas 3 This chapter sets up the IS-LM model, which chapter 11 then uses extensively to analyze the effects of policies and economic shocks. This chapter also introduces students to the Keynesian Cross and Liquidity Preference models, which underlie the IS curve and LM curve, respectively. If you would like to spend less time on this chapter, you might consider omitting the Keynesian Cross, instead using the loanable funds model from Chapter 3 to derive the IS curve. Advantage: students are already familiar with the loanable funds model, so skipping the KC means one less model to learn. Additionally, the KC model is not used anywhere else in this textbook. Once it’s used to derive IS, it disappears for good. However, there are some good reasons for NOT omitting the KC model: 1) Many principles textbooks (though not Mankiw’s) cover the KC model; students who learned the KC model in their principles class may benefit from seeing it here, as a bridge to new material (the IS curve). 2) The KC model has historical value. One could argue that somebody graduating from college with a degree in economics should be familiar with the KC model. The Science of Macroeconomics Macroeconomics is the study of the economy as a whole, including growth in incomes changes in the overall level of prices the unemployment rate .