IA #2 Macroeconomics

Are you ready to begin? Performance goals – If you can answer the following questions you are ready to start your macro commentary – If you can’t, you need to hit the books – Drill it to kill it – flip through this PowerPoint each day

In 30 seconds describe a strong economy Price level(s) Output Employment Business cycle

In 30 seconds describe a weak economy Price level(s) Output Employment Business cycle

In 30 seconds answer: What is GDP? Definition Where is output plotted using an AD/AS diagram? Where is LR output on the Business Cycle diagram? What might cause an increase in national output?

Answer in 3 minutes: why is the real in real GDP necessary? How is national output measured? Explain some of the problems national income accountants encounter when they try to make comparisons between two years, e.g v 2013 Why are price fluctuations a problem? How do national income accountants avoid this problem?

Answer in 1 minute: What model(s) are used to study the macro economy? What is AD? What is AS? What three equilibriums are possible? What are two big assumptions that differentiate the Keynesian and New Classical models?

3 minutes: What is inflation? What is it? What problems does inflation create?

15 minutes: Explain and illustrate the causes of inflation Demand pull inflation Cost push inflation The quantity theory of money (good if you can do it but not necessary for the commentary) PY=Mv

10 Minutes: What can Governments do to deal with inflation (and/or unemployment) Fiscal policy Monetary policy Supply-side policies

10 minutes: What is stagflation and why should we care? Effects of expansionary fiscal policy when capacity is available (depression) Effects of expansionary fiscal policy when capacity is not available (full employment)

FACT: Governments spend money What is the impact of government spending in an inflationary environment? (Boom) What is the impact of government spending in a deflationary/depression environment? (Trough)

HL In 10 minutes: Using the Phillips curve… Explain the SR/LR effects of expansionary fiscal policy using the PC

Find a newspaper article Discusses inflation Mentions “government” policy, e.g. spending, unemployment, monetary policy In the context of inflation or deflation

10 minutes: Evaluate a government policy (decision) Evaluate… – higher order thinking – weigh the pros and cons – compare result with macroeconomic objectives Full employment Stable prices Economic growth Equitable distribution of income – Say something interesting (speak to the noble intention of the policy and how it fails to measure up)