This document is a presentation on macroeconomic topics by Group 11. It includes:
1. An introduction slide with the names and IDs of 6 group members.
2. Information that the course is Macroeconomics, taught by Professor Fahimul Kader Siddique at Begum Rokeya University.
3. Several slides by individual group members summarizing key macroeconomic concepts like Okun's Law, time horizons, aggregate demand and supply curves, and how stabilization policy addresses shocks.
6. Okun‘s Law
Yale professor and economist Arthur Okun was born in November 1928 and died in March 1980 at the age of 51. He first
published his findings on the subject in the early 1960s, which have since come to be known as his “law.”2 Okun’s law is,
in essence, a rule of thumb to explain and analyze the relationship between jobs and growth. A talk from former Federal
Reserve Chair Ben Bernanke perhaps most succinctly summarizes Okun’s law basic concepts.
7. Okun‘s Law
Okun’s law investigates the statistical relationship between
a country’s unemployment rate and the growth rate of its
economy. The economics research arm of the Federal
Reserve Bank of St. Louis explains that Okun’s law “is
intended to tell us how much of a country’s gross domestic
product (GDP) may be lost when the unemployment rate is
above its natural rate.” It goes on to explain that “the logic
behind Okun’s law is simple. Output depends on the
amount of labor used in the production process, so there is
a positive relationship between output and employment.
Total employment equals the labor force minus the
unemployed, so there is a negative relationship between
output and unemployment (conditional on the labor
force).”
10. What is the meaning of time horizon?
Time horizons are periods where investments are held until they are needed. Time
horizons vary according to the investment goal.
It may be-
short run(a few years) :year to year movements in output primarily driven by
demand.
Medium run(a decade):output demand by supply factors.
Long run(a few decade or more):economy depends on innovation, how much
people save, quality of education system, quality of government and so on.
11. Key points of time horizon
Time horizons also vary according to the time by which you
begin investment.
The longer the time horizon, the longer the power of
compounding has to work.
Generally speaking, the longer the time horizon, the more
aggressive an investor can be in their portfolio.
12. 12
Where is the time
horizon used?
The time horizon used for an economic evaluation is the duration
over which health Outcome and cost are calculated.
The choice of time horizon is an important decision for economic
modelling.
13. 13
What is the time
horizon planning?
A time horizon, also known as a planning
horizon, is a fixed point of time in the future at
which point certain processes will be evaluated
to end.
15. 15
What is the Short run?
The Short Run Analysis of the macroeconomics in the short
run—a period in which stickiness of wages and prices may
prevent the economy from operating at potential output—
helps explain how deviations of real GDP from potential
output can and do occur.
16. 16
What is the long run?
The long run is the period when the general price level,
contractual wage rates, and expectations adjust fully to the state
of the economy. This stands in contrast to the short run, when
these variables may not fully adjust
Long Run
17. 17
Example
A business with a one-year lease will have its long run defined as
any period longer than a year since it’s not bound by the lease
agreement after that year. In the long run, the amount of labor,
size of the factory, and production processes can be altered if
needed to suit the needs of the business or lease issuer.
19. 19
The model of aggregate demand and
aggregate supply
The aggregate demand/aggregate supply model
is a model that shows what determines total
supply or total demand for the economy and how
total demand and total supply interact at the
macroeconomic level
21. 21
The Difference in Aggregate Supply Curve in the
Short Run and the Long Run
The short-run aggregate supply curve is an upward slope. The short-run is when all production occurs in real
time. The long-run curve is perfectly vertical, which reflects economists' belief that changes in aggregate
demand only temporarily change an economy's total output.
23. 23
Shocks to Aggregate Supply and Demand
Shocks to aggregate demand is anything that reduces money demand: the velocity of money. Policies that the
Federal government can implement to move the aggregate demand back to its natural level is
increasing/decreasing the velocity of money or “skillfully controlling the money supply”
24. Shocks to Aggregate Supply and Demand
Shocks to aggregate demand is anything that reduces money demand: the velocity of money. Policies that the
Federal government can implement to move the aggregate demand back to its natural level is increasing/decreasing
the velocity of money or “skillfully controlling the money supply”
25. 25
Stabilization policy
Stabilization policy refers to a strategy implemented
by the government of a nation to ensure that the
economy is steady, this policy reduces price
fluctuations in an economy through the
implementation of certain measures and monitoring
the economic cycle.
