Intermediate Macroeconomics Lecture 4
Intermediate Macroeconomics Lecture 4
Topics 1. 4 questions from before 2.HW#1 3. Unemployment x Natural rate of unemployment 1) 2 reasons for unemployment A. Frictional unemployment B. Wait unemployment 2) Patterns of unemployment
Topics 1. 4 questions from before 2. HW #1 3. Unemployment ** Natural rate of unemployment 1) 2 reasons for unemployment A. Frictional unemployment B. Wait unemployment 2) Patterns of unemployment
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Before We Start… ◼ Give our T.A.’s a big applause!!! ☺ ◼ Join our forum http://forum.ccer.edu.cn/forum/area.a sp?areaid=133125
Inventories Year Prod. Sold Price 200010 100 20010 20020 801 200 300 20030 o broken 400 Year I(investment is not stock, but flow) GDP 2000800200 1000 200100 2002300|-300 0 20030 Inventories-400: Depreciation +4000
Inventories Year Prod. Sold Price 2000 10 8 100 2001 0 0 200 2002 0 1 300 2003 0 0 broken 400 Year C I (investment is not stock, but flow) GDP 2000 800 200 1000 2001 0 0 0 2002 300 -300 0 2003 0 Inventories –400;Depreciation +400 0
Real vs nominal Profit=p*Y-W*L一r*K Y=MPL*L+MPK来K W(r: return to L(K)in terms of money(nominal) MPL (MPK): return to L(K)in terms of products(real)
Real v.s. Nominal Profit = p * Y – w * L – r * K Y = MPL * L + MPK * K W ( r ):return to L (K) in terms of money (nominal) MPL (MPK):return to L (K) in terms of products (real)
Increase income tax rate What are the effects on the loanable funds market? t→T→Y-T→prⅳ vate savings↓ However T↑→T-G↑→> public savings↑ Therefore the final result will be Depends. e
Increase income tax rate ◼ What are the effects on the loanable funds market? t↑→T↑→Y – T↓→private savings↓ However, T↑→T – G↑→public savings↑ Therefore, the final result will be… Depends… ☺
Quantity Demanded v.S. Demand r↑or! affects I r2 A B I2 I1
Quantity Demanded v.s. Demand ◼ r ↑or↓affects __I____ r1 r2 I2 I1 A B I( r )
Quantity Demanded v.S. Demand (r)↑ orlaffects I(r) S, I
Quantity Demanded v.s. Demand ◼ ___I ( r )___↑or↓affects S, I r S I( r ) E E’ r* r*’ I (r )’
Natural Rate of Unemployment Definitions a)Misery index: the sum of inflation and unemployment rates b)Natural rate of unemployment: the average rate of unemployment around which the economy fluctuates
Natural Rate of Unemployment ◼ Definitions a) Misery index: the sum of inflation and unemployment rates b) Natural rate of unemployment: the average rate of unemployment around which the economy fluctuates
Natural Rate of Unemployment - In eq'm, natural rate of unemployment is a constant f X*K U=s * E f: the rate of job finding s: the rate of job separation U: unemployed E: employed
Natural Rate of Unemployment ◼ In eq’m, natural rate of unemployment is a constant f * U=s * E f: the rate of job finding s: the rate of job separation U: unemployed E: employed