Government Debt 1. Is budget deficit correctly measured? （1)Inflation （2)Capital Assets （ 3)Uncounted liabilities （ 4) Business cycle

1.选择题 （1)D （2)C （3)A （4)A （5)C （6)A （7)C （8)2 （9)A

Questions from Last Lecture Demand for money↑ =)=l ,Y) ↑ while fixed →l(r,y: hold& to balance the pressure ofd↑; hold,↑ to balance

The money market LM curve The theory of liquidity preference

Goal Develop the Solow Growth Model How much of the economy's output should be consumed today and how much should be saved for the future? Static analysis(Ch. 3)> Dynamic

Topics 4 questions from before HW#1 Unemployment Natural rate of unemployment reasons for unemployment Frictional unemployment Wait unemployment Patterns of unemployment

The Data of macroeconomics * Measure of economic activity Gross Domestic Product(GDP) Total expenditure on domestically-produced final goods and services Total income earned by domestically located factors of production

Economics Studies human behavior Uncertainty ** It depends...*** on what?--- factors Why?--- intuitions How?--- logic Conclusions?

Investment Business fixed investment Equipment and structures that businesses buy to use in production Residential investment New housing that people buy to live in and that landlords buy to rent out Inventory investment Goods that business put aside in storage, including materials and supplies, work in process, and finished goods

The Open Economy in the SR The Mundell-Fleming Model Model under floating ex-rate Model under fixed ex-rate Interest-rate- differentials Debate over floating v.s. fixed ex-rate Mundell-Fleming model with changing price level Model in large open economy