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Lecture 1

IAS 107 Lecture Notes - Lecture 1: Great Moderation, Gdp Deflator, Stagflation

2 pages23 viewsSpring 2017

Department
International And Area Studies
Course Code
IAS 107
Professor
Mario Muzzi
Lecture
1

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Intermediate Macroeconomics
I. Introduction
A. Economics is a social science
1. Subject matter
2. Foundational assumption: humans are
“rational self-interested utility maximizers.”
3. Models: illustrates the essence of the real
world.
a. Assumptions and exogenous variables
are given
b. Endogenous variables: variables that
the model explains or predicts.
c. Example: supply &demand
i. Assumptions: Law of Demand,
Law of Supply, Equilibrium.
ii. Exogenous: income and price
of inputs
iii. Endogenous: price and
quantity
B. Micro v. Macro
C. The Three Most Important Variables in Macro
1. GDP growth
2. General Prices
3. Unemployment rate
4. Other variables: Govt Debt, Inequality,
Trade Balance
D. Brief Summary of Recent U.S. Economic
History
a. Prior to WWI
b. 1920s: moderate deflation, 4.2%growth,
unemployment rate around 5%
c. Great Depression
d. Post WWII to 1970
e. 1970s: Stagflation and 10.4%
unemployment.
f. 1982- 2007: The great moderation.
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