1. Macroeconomics Chapter 1
Textbook
Robert Barro:
Macroeconomics -- A Modern Approach
Others：
Macroeconomics by Stephen D. Williamson
Economic Growth by Charles I. Jones
Macroeconomics Chapter 1

2. Macroeconomics Chapter 1
Evaluation
4 Assignments 20%
Midterm %
Final %
Participation 10%
Macroeconomics Chapter 1

3. C h a p t e r 1
Thinking About Macroeconomics
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4. What can we learn from this course?
Macro
economics
Determining the aggregate economic variables
Real variables
Nominal variables
real GDP
Consumption
Investment
Export & Import
Unemployment (employment)
General price level
Wage rate
Rental price
Interest rate
Exchange rate
Macroeconomics Chapter 1

5. Output, Unemployment, and Prices in U.S. History
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6. Output, Unemployment, and Prices in U.S. History
Growth rate of real GDP for year t
Multiply by 100% to get the growth rate of real GDP in percent per year.
Macroeconomics Chapter 1

7. Output, Unemployment, and Prices in U.S. History
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8. Output, Unemployment, and Prices in U.S. History
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9. Output, Unemployment, and Prices in U.S. History
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10. Output, Unemployment, and Prices in U.S. History
Inflation rate for year t
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11. Output, Unemployment, and Prices in U.S. History
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12. A Brief Introduction of Chinese Success (All data without special notes are from Chinese Statistical Yearbook)
Nominal : :
GDP Billion RMB Billion RMB
GDP p.c Yuan RMB Yuan RMB
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13. Macroeconomics Chapter 1
Real GDP
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14. Macroeconomics Chapter 1
Growth rate ( in RMB )
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15. Macroeconomics Chapter 1
Who enjoys ?
Poverty level: <100 yuan p.c. in Million
<625 yuan p.c. in Million
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16. Macroeconomics Chapter 1
In general, Gini coefficient of the income increases since 1985.
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17. Macroeconomics Chapter 1

18. Macroeconomics Chapter 1

19. Macroeconomics Chapter 1
Economic Models
Endogenous variables are the ones that we want the model to explain.
Exogenous variables are the ones that a model takes as given and does not attempt to explain.
Macroeconomics Chapter 1

20. Microeconomic Foundation
A microeconomic approach to study the optimal decisions of individual households and business. For example, how much to save (households), how much to invest (firms).
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21. Macroeconomics Chapter 1
Economic Models
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22. Economic Models The Coffee Market
Target
Determinants of the price of coffee.
What pushes up the price of coffee?
Rising demand
popularity of the coffee culture
Health concerns
Macroeconomics Chapter 1

23. Economic Models The Coffee Market
Demand curve:
Quantity of coffee demand as a function
of coffee price, given tea price.
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24. Economic Models The Coffee Market
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25. Economic Models The Coffee Market
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26. Economic Models The Coffee Market
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27. Economic Models The Coffee Market
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28. Flexible Vs. Sticky Price
Market-clearing condition assumes that prices can adjust freely so that there always exists a price which equates supply to demand.
However, this condition fails in the labor market given the existence of unemployment.
Disequilibrium a discrepancy between the quantities of labor demanded and supplied.
New Keynesian model, argues that some prices are sticky and move only slowly to equate the quantities of goods demanded and supplied.
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29. Macroeconomics Chapter 1
Economic Models
Economic growth model
Equilibrium business-cycle model - basic market-clearing model of economic fluctuations
Macroeconomics Chapter 1