June 18, 2003

The Mundell-Fleming Model

P6180010a.jpg

P6180009a.jpg

Thinking about how the exchange rate affects imports and exports:

P6180007a.jpg

P6180013a.jpg

P6180014a.jpg

Posted by bparke at 02:39 PM

June 13, 2003

Midterm 1

P6120154a.jpg

P6120155a.jpg

P6130156a.jpg

P6130157a.JPG

P6130158a.jpg

P6130159a.jpg

P6130160a.jpg

P6130161a.jpg


Posted by bparke at 01:40 PM

Rational Expectations

Shifting the labor demand curve by changing prices can increase labor hired and output if workers base the labor supply curve on price expectations that do not adjust rapidly. If works have "rational expectations" and anticipate the need to adjust labor supply in light of the new prices, the equilibrium might not move horizontally at all.

P6120152a.jpg

Posted by bparke at 01:37 PM

A Real Business Cycles Model

Robinson Crusoe provides a "representative agent" economy with one truly representative agent.

P6120150a.jpg

The indifference curves are mirror images of the usual case:

P6120149a.jpg

Posted by bparke at 01:33 PM

Implementation of Monetary Policy

The central bank actually implements monetary policy by creating new money in the form of computer entries, not in the form of currency.

P6130165a.jpg

P6130163a.jpg

Posted by bparke at 01:28 PM

June 09, 2003

Getting Ready for MT #1

We must be ready:

P6090126a.jpg

P6090127a.jpg

Would shifting the LM curve work?

P6090128a.jpg

P6090129a.jpg

P6090130a.jpg

P6090131a.jpg

Posted by bparke at 02:52 PM

June 06, 2003

Discussion of Old Exam Questions

Effects of improved worker productivity on the price level. The lower-left diagram is a review of marginal tax rate cuts vs. lump sum rebates.

P6060111a.jpg

A backward-bending labor supply curve:

P6060113a.jpg

Paypal and/or ATMs increase the velocity of money:

P6060116a.jpg

How deflation and zero interest rates make it difficult to stimulate the economy by shifting the LM curve.

P6060114a.jpg

Posted by bparke at 03:04 PM

June 05, 2003

Tax Cuts

We compared the effects of marginal tax rate cuts and lump sum tax rebates under the Keynesian and Classical views.

P6050110a.jpg

At a given wage rate, we expect a cut in the income tax rate to increase labor supply.

P6050109a.jpg

The effect of a lump sum rebate is not as clear. It could increase or decrease the labor supply at a given wage rate.

P6050108a.jpg

P6050105a.jpg

P6050106a.jpg


Posted by bparke at 01:23 PM

June 04, 2003

Keynsian Aggregate Supply Curves

P6040090a.jpg

A numerical version of the MPN analysis:

P6040092a.jpg

The Classical View:

P6040094a.jpg

The fixed wage view:

P6040095a.jpg

The flexible W, fixed price expectations (for workers) view:

P6040096a.jpg

A restatement of the Classical view:

P6040097a.jpg

Posted by bparke at 01:42 PM

Exam Questions

P6040091a.jpg

Posted by bparke at 01:41 PM

June 03, 2003

Deep

The problem is (i) the slopes of the curves and (ii) how far they shift. The results determine the effectiveness of monetary and fiscal policies.

P6030078a.jpg

A general view of the issue:

P6030075a.jpg

Applied to the IS and LM curves:

P6030076a.jpg

The slope of the LM curve depends on how large the changes in money demand caused by income changes

How much the LM curves shifts with an increase in the money supply depends on the interest rate eleasticity of money demand.

P6030081a.jpg

A similar story for the IS curve:

P6030082a.jpg

The shift n the IS curve depnds on the slope of the savings function.

P6030083a.jpg

Posted by bparke at 01:50 PM

June 02, 2003

IS/LM AS/AD

Derive the Aggregate Demand curve by changing P for a fixed money supply:

P6020050a.jpg

P6020053a.jpg

For a given price level, a change in G-T or in M shifts the AD curve:

P6020054a.jpg

How do we explain this data?

P6020061a.jpg


Posted by bparke at 03:04 PM

IS/LM

Deriving the IS curve and show how it shifts with changes in G-T:

P5300041a.jpg

Derive the LM curve and show how it shifts with changes in M.

P5300044a.jpg

P5300042a.jpg


Posted by bparke at 02:59 PM

The Simple Keynesian Model

P5300036a.jpg

Posted by bparke at 02:53 PM