文档介绍：The Science of Macroeconomics
1
Modified for EC 204
by Bob Murphy
In this chapter, you will learn:
about the is (R)
1992 % % Clinton (D)
1996 % % Clinton (D)
2000 % % Bush II (R)
2004 % % Bush II (R)
2008 % % Obama (D)
Economic models
…are simplified versions of a more complex reality
irrelevant details are stripped away
…are used to
show relationships between variables
explain the economy’s behavior
devise policies to improve economic performance
The use of multiple models
No one model can address all the issues we care about.
., a supply-demand model of the . car market…
can tell us how a fall in aggregate . income affects price & quantity of cars.
cannot tell us why aggregate income falls.
The use of multiple models
So we will learn different models for studying different issues (., unemployment, inflation, long-run growth).
For each new model, you should keep track of
its assumptions
which variables are endogenous, which are exogenous
the questions it can help us understand, those it cannot
Prices: flexible vs. sticky
Market clearing: An assumption that prices are flexible, adjust to equate supply and demand.
In the short run, many prices are sticky – adjust sluggishly in response to changes in supply or demand. For example:
many labor contracts fix the nominal wage for a year or longer
many magazine publishers change prices only once every 3-4 years
Prices: flexible vs. sticky
The economy’s behavior depends partly on whether prices are sticky or flexible:
If prices sticky (short run), demand may not equal supply, which explains:
unemployment (excess supply of labor)
why firms cannot always sell all the goods they produce
If prices flexible (long run), markets clear and economy behaves very differently
Outline of this book:
Introductory material (Chaps. 1 & 2)
Classical Theory (Chaps. 3-6) How the economy works in the long run, when prices are flexible
Growth Theory