Macro Economics

CL4 English Language and Culture for Business Module IV B2 European Economic Policy Dr. Peter Cullen www.cl4englishlistening.wordpress.com

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object]

The Balance of the Nation State ,[object Object],P AD Income, Output, Y P Income, Output, Y Reducing the money supply pushes the aggregate demand curve to the left DA 1 DA 2

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],K L Y

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],Y

The Balance of the Nation State ,[object Object],A drop in aggregate demand P Income, output, Y STAS B A DA 1 DA 2 Viscous short-term prices Output drops

The Balance of the Nation State ,[object Object],[object Object],[object Object]

The Balance of the Nation State ,[object Object],A B C STAS DA 1 DA 2 1. A drop in aggregate demand 2. Forces down output in the short term 3. But in the long run affects only prices Y ¯ Income, output, Y

The Balance of the Nation State ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Goods Market ,[object Object],[object Object],[object Object]

The Goods Market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Goods Market ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Goods Market ,[object Object],[object Object],[object Object],[object Object]

The Goods Market ,[object Object],[object Object],[object Object],¯ ¯ ¯ ¯ ¯ ¯ E Income, Output, Y 1€ MPC Marginal Propensity of Consumption

The Goods Market ,[object Object],A B Income, Output, Y E ∆ G E 1 = Y 1 E 2 = Y 2 AE PE ∆ Y

The Goods Market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Goods Market E AE PE Income, Output, Y ∆ I Y 2 Y 1 Interest rate, r Investment, I Interest rate, r Income, Output, Y r 1 r 2 I(r 1 ) I(r 2 ) 1 2 3 4 5 r 1 r 2 Y 2 Y 1 IS Note: an increase in public spending pushes the PE curve up and moves the IS curve to the right

The Money Market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Money Market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],¯ ¯

The Money Market ,[object Object],[object Object],[object Object],[object Object]

The Money Market ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Money Market M/P Real Money Balances, M/P ¯ ¯ Interest rate, r Supply Demand, L(r) Equilibrium interest rate What happens when the curve shifts to the left?

Macro Economics

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