ECON 2020 Lecture Notes - Lecture 1: International Swaps And Derivatives Association, Flat Tax, Open Market Operation

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MACRO 1/12/2015 10:09:00 PM
Spot.colorado.edu/~kaplan
Dec. jobs report
Dec +252,000
2014 +2.95m
o best year since 1999
unemployement rate
o 5.6%
Real GDP
o Q3 5% annual growth rate
Lower gas prices
o Supply
Increased US production
Better technology(fracking)
o Demand
slower growth
less domestic consumption
o In Europe\
Low to zero economic growth
Lower demand for oil
PPF (production possibilities frontier
production
o inputs outputs
k & l
capital and land
investments
shows trade off in production of one good to another at certain
points
3 assumptions to produce at a point along the PPF
o finite inputs at any given time
o technology
o efficiency
PPF shows
o Scarcity
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o Opportunity cost
o Choice
Expansion of PPF
o Increased outputs
Can be measured by the Labor force growth rate
o Technology
Measured by worker productivity
Supply Side Growth
o Capacity for expansion
Supply side
o Represents potential output
Will be met if we assume efficiency
o Does not represent actual output
Comparative advantage
o Specialization
o Trade
Between specialization and trade, a country can
increase output, expand ppf
Increase in standard of living, wealth
Increase in consumption
World Bank forecast for global economic growth
Located in DC
Countries can borrow money from the world bank
June 2014 forescast for 2015
Global Economy
o 2014 global economy grew 2.6%
o expect 3% growth in 2015
forecasted for 3.4% in june 2014
US economy
o Forecast is 3.2% growth
Was 3%
o Lower prices of oil allow for more purchases of other goods
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For every cent price of gasoline is lowered, about 1
billion more spending power in US economy
GDP growth shown by this
Emerging Markets
o Non/under developed countries
India, china, Latin America
Emerging markets expected to grow 4.8%
Down from 5.3%
China expected 7.1%, down from 7.5%
India 6.4%, UP from 6.3%
Brazil was 2.7%, now 1%
o Prices of exports have been falling
world wide
o Concerns for emerging markets
High levels of government debt
Weaker currencies/currency depreciation
Increases price of imports
Eurozone countries
o Any country that uses the euro as their currency
o 1.1% expected growth, down from 1.8%
2 recessions since 2007
high debt levels
lack of international competitiveness
Russia
o Was projected for a 0.5% growth, down to -2.9%
Severe recession
Western sanctions
In response to invasion and occupation of Ukraine
50% of gov. revenues came from oil exports
falling oil prices
russia announced cuts in gov. budget everywhere
but military
The Ruble(Russian currency) is depreciating
Capital flight
Money/savings leaving country
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Document Summary

Real gdp: q3 5% annual growth rate. Slower growth less domestic consumption: in europe\ Shows trade off in production of one good to another at certain points. 3 assumptions to produce at a point along the ppf: finite inputs at any given time, technology, efficiency. Ppf shows: scarcity, opportunity cost, choice. Can be measured by the labor force growth rate: technology. Supply side growth: capacity for expansion. Will be met if we assume efficiency: does not represent actual output. Between specialization and trade, a country can increase output, expand ppf. Countries can borrow money from the world bank. Global economy: 2014 global economy grew 2. 6, expect 3% growth in 2015 forecasted for 3. 4% in june 2014. Us economy: forecast is 3. 2% growth. Was 3: lower prices of oil allow for more purchases of other goods. For every cent price of gasoline is lowered, about 1 billion more spending power in us economy.

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