Lectures in Macroeconomics- Charles W. Upton What Causes Business Cycles.

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Presentation transcript:

Lectures in Macroeconomics- Charles W. Upton What Causes Business Cycles

Our Basic Equation

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Changes in Employment S SR S LR D H* w* Anything that causes a shift in D can cause a business cycle

What Causes Business Cycles For Example S SR S LR D H* w* Anything that causes a shift in D can cause a business cycle People become less confident about the future

What Causes Business Cycles Another Example S SR S LR D H* w* Anything that causes a shift in D can cause a business cycle People become less confident about the future The government temporarily changes spending

What Causes Business Cycles Yet Another Example S SR S LR D H* w* Anything that causes a shift in D can cause a business cycle People become less confident about the future The government temporarily changes spending The Federal Reserve System temporarily changes interest rates

What Causes Business Cycles Imperfect Information S SR S LR D H* w* Changes in the level of employment can come about because of something called imperfect information.

What Causes Business Cycles Imperfect Information S SR S LR D H* w* Changes in the level of employment can come about because of something called imperfect information. This is not a minor issue – and it is complicated - so we defer it to separate lectures

What Causes Business Cycles Changes in K

What Causes Business Cycles Capacity Utilization

What Causes Business Cycles Capacity Utilization

What Causes Business Cycles Too Much of a Good Thing We could include it, but it makes life complicated. So we will assume that K is always fully employed

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Our Basic Equation

What Causes Business Cycles Real Business Cycles This is not a minor issue – and it is complicated - so we defer it to separate lectures

What Causes Business Cycles End ©2006 Charles W. Upton. All rights reserved