ECON 312: INTERMEDIATE MACROECONOMICS - Notes

<u>4 Macro Indicators</u><br /><ol><li>GDP</li><ul><li>about $15 T in US</li><li>US largest country by GDP</li><li>followed by Euro Trading Block and China</li><li>BRIC Countries fastest growing GDPs</li><ul><li>BRIC = Brazil, Russia, India, China<br /></li></ul></ul><li>Inflation</li><ul><li>Overall inflation in US in 2011 = 3%</li><li>Core Inflation (not counting food and energy) = 2.2%</li></ul><li>Unemployment</li><ul><li>8.5%</li><li>doesn't include underemployed or discouraged <br /></li></ul><li>Interest Rates</li><ul><li>very low</li><li>Federal Fund Rate about 0%</li><li>10yr Gov't Bond about 1.92%</li></ul></ol><br /><u>Models</u><br /><ol><li>Macro</li><ul><li>general equilibrium</li></ul><li>Variables</li><ul><li>exogenous</li><ul><li>given from outside model</li><li>causes change</li></ul><li>endogenous</li><ul><li>with in model</li><li>reflects change</li></ul></ul><li>Functional Notation</li><ul><li>See relationship<br /></li></ul><li>Graphing<br /></li></ol><br /><u>Prices</u><br /><ul><li>Wages = Price of Labor</li><li>Interest Rate = Price of Borrowing</li></ul>Prices are variable with different time horizons<br /><ul><li>Long Run&nbsp; -&nbsp; Prices Flexible</li><li>Short Run&nbsp; -&nbsp; Prices Sticky<br /></li></ul><br /><br /><br />

4 Macro Indicators

1. GDP
• about $15 T in US
• US largest country by GDP
• followed by Euro Trading Block and China
• BRIC Countries fastest growing GDPs
• BRIC = Brazil, Russia, India, China
  
2. Inflation
• Overall inflation in US in 2011 = 3%
• Core Inflation (not counting food and energy) = 2.2%
3. Unemployment
• 8.5%
• doesn't include underemployed or discouraged
  
4. Interest Rates
• very low
• Federal Fund Rate about 0%
• 10yr Gov't Bond about 1.92%

Models

1. Macro
• general equilibrium
2. Variables
• exogenous
• given from outside model
• causes change
• endogenous
• with in model
• reflects change
3. Functional Notation
• See relationship
  
4. Graphing
   

Prices

• Wages = Price of Labor
• Interest Rate = Price of Borrowing

Prices are variable with different time horizons

• Long Run  -  Prices Flexible
• Short Run  -  Prices Sticky