Samenvatting Macroeconomics

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ISBN-10 1292115238 ISBN-13 9781292115238
269 Flashcards en notities
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Samenvatting 1:

  • Macroeconomics
  • Manfred Gartner
  • 9781292115238 of 1292115238
  • 2016

Samenvatting - Macroeconomics

  • 1 Macroeconomic essentials

  • Microeconomics studies individual entities such as consumers or firms
  • macroeconomics studies the whole economy from a bird's-eye perspective
  • Income
    revenue derived from work and assets, such as wages, interests, dividends and profits.
  • Factors of production
    all resources used in the production of goods and services: labour, capital goods such as machines, and natural resources such as oil.
  • the expenditure approach measures aggregate output as the sum of all spending. the income approach adds up all incomes instead.
  • transfers
    payments from governments to individuals or firms that do not involve goods or services, such as welfare payments or housing subsidies.
  • Income receive by households may not arrive at the firms as demand for three main reasons:
    - People save (money)
    - Governments levy taxes
    - People buy foreign goods
  • Each of the leakages described above has a counterpart representing an injection into the circular flow:
    - Firms invest
    - Government spending
    - Foreigners buy our goods
  • The following equation holds at all times:

    (S - I) + (T - G) + (IM - EX) = 0
  • National income accounts
    report data for GDP and its components
  • Countries run twin deficits if both the government budget and the current account are in deficit.
  • money
    is anything that sellers generally accept as payment for goods and services
  • the quantity equation M x V = P x Y becomes a theory of inflation, the quantity theory of money, by letting V be constant. Then the money supply determines nominal income: P x Y = V (met streepje erboven) x M.
  • Aggregate supply curve
    indicates how much output firms are willing to produce at various price levels.
  • the government budget is primarily a planning instrument. In hindsight it breaks down government receipts and expenditures, and shows how deficits are being financed.
  • The balance of payments records a country's trade in goods, services and financial assets with other countries.
  • The central bank is a government agency primarily responsible for supplying the economy with the right amount of money.
  • the current account records goods, services and transfers into and out of the country.
  • the capital account records the flow of financial assets into and out of the country.
  • the official reserve account records the purchases and sales of foreign currency by the central bank.
  • a model is a simplified, logically coherent story that links economic variables like consumption and taxes to each other.
  • a mathematical model tells its simplified, logically coherent story by means of algebraic equations.
  • empirical tests are confrontations of hypotheses (statements) derived from models (or theories) with real-world data or events. They serve to gauge whether a model is useful or not.
  • institutions are economic, political or legal structures within which individuals operate. Examples are formal organizations, written law, or informal customs and norms.
  • 2 Booms and recessions: the Keynesian cross

  • the steady-state income results when all variables, including the capital stock, have adjusted to their desired or equilibrium levels.
  • potential income is the income that can be produced with current labour and capital. The capital stock may or may not have reached its equilibrium level.
  • the business cycle refers to recurring fluctuations of income relative to potential income. A boom (or expansion) describes rising income (relative to potential income) which culminates in a peak. A recession describes declining income (relative to potential income) which bottoms out at a trough.
  • Gross Income
    Y
  • Disposable income
    Y - T
  • Consumption
    C = Y - T - S
  • Imports
    IM
  • Aggregate expenditure
    is the sum of all planned or voluntary spending on domestically produced goods and services.
  • Actual expenditure
    is the sum of all categories of demand, including unplanned investment
  • Income always equals actual expenditure: this is because if nobody wanted to buy the firms' production (which equals income) voluntarily, the firms would be forced to buy it themselves, having to undertake unplanned investment. Income equals aggregate (desired) expenditure in equilibrium, that is, if all spending is as planned, then firms need not change inventories in an undesired way.
  • Taxes T in our models are net taxes, the difference between all taxes and transfers. Government spending G in our models are government purchases of goods and services. It does not include transfers.
  • The marginal propensity to consume says by how much consumption rises if income rises by one unit.
  • the Keynesian cross is a diagram which plots planned expenditure against income and actual expenditure against income. Equilibrium income obtains where both lines cross.
  • at equilibrium income all spending is planned spending (or income equals aggregate expenditure)
  • the multiplier measures the income change resulting from a one-unit increase in autonomous expenditure.
  • rule: the multiplier is small when a large part of any increase in income leaks out of the circular flow.
  • Disposable income is that part of income left to households after the payment of taxes
  • the marginal income tax rate says by how much taxes rise if income rises by one unit. The average income tax rate gives the share of taxes on income on average, that is T/Y.
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Samenvatting 2:

  • Macroeconomics
  • Manfred Gärtner
  • 9780273769958 of 0273769952
  • 2013

Samenvatting - Macroeconomics

  • 1.2 Essentials of macroeconomic accounting

  • What is aggregate output?
    The total output of the economy, most easily measured as sum of all spending
  • What are the three main reasons not all salary paid flows back to the firms?
    - People save
    - Government levy taxex
    - People buy from foreign firms
  • What are the three main injections into the circular flow upping the domestic aggregate output?
    - Firms invest
    - Government spending
    - Foreigners buy goods
  • What are 'transfers'?
    Transactions by the government not involving goods or services (welfare, subsidies ect)
  • What equation involving all three leakages and injections, paired up, holds at all times?
    (S-I) + (T-G) + (IM-EX) = 0
  • What are the domestic net savings? (circular flow)
    The balance of S-I
  • What are the public net savings? (circular flow)
    The balance of T-G
  • What are the net exports? (circular flow)
    The balance of IM-EX
  • What are national income accounts?
    They report data for GDP and its components
  • When do we speak of a country in 'twin deficit'?
    When both the government budget and the current account are in deficit
  • 1.2.1 Money in the circular flow

  • What is nominal income?
    Income expressed in currency
  • What is real income?
    Income expressed in actual goods
  • What is the quantity equation?
    M x V = P x Y
  • When do we have inflation whilst looking at the quantity equation?
    When the pricelevels increase faster than the money supply
  • When the aggregate supply curve is vertical,what influence does changes in price levels have on production?
    Zero, since the supply curve is vertical, it will produce that amount no matter the prices
  • 1.2.2 The government budget and the balance of payments

  • What is the government budget?
    The planned government incomes and expenditures
  • What is a countries balance of payments?
    The result of trades with other countries
  • Governments have an extra option for running in debt compared to individuals; what is this option?
    Running in debt with the central bank
  • The government budget change can be divided in two categories, give this mathematical expression:
    G-T = ΔBPS + ΔBCB
    Where BPS is the Government debt owed to the private sector
  • What is the expression for the balance of payments does always hold?
    CA + CP + OR = 0
  • What does the current account measure?
    The demand for domestic currency due to the in and out flows of goods and services with the rest of the world
  • What does the capital account measure?
    The demand of domestic currency due to the in and out flow of financial assets with the rest of the world
  • What does the official reserve measure?
    The demand of domestic currency due to government intervention
  • if RES denotes the reserves of the central bank in foreign currency, what does OR measure? give the mathematical expression
    The change in RES
    OR = -ΔRES
  • When the central bank of europe sells one million dollars in exchange of euros, will OR be positive or negative?
    OR will be positive, since the reserves of foreign currency fall (= negative) and OR is the oppisite sign of ΔRES
  • How is F, net foreign assets, defined?
    net foreign assets is domestic holdings of foreign assets minus foreign holdings of domestic assets
  • If F denotes the net foreign assets, what does the capital account measure? Give the mathematical formula
    The change in F in opposite sign:
    CP = -ΔF
  • If F denotes the net foreign assets and RES the central banks reserves of foreign currency, how can EX-IM also be equated? 
    EX - IM = ΔF + ΔRES
  • How is the equation EX - IM = ΔF + ΔRES a proof of CA + CP + RES = 0?
    CA = EX - IM
    CP = -ΔF
    OR = -ΔRES
    Hence,
    CA + CP + RES = EX - IM - ΔF - ΔRES = ΔF - ΔF + ΔRES - ΔRES = 0
  • How are BCB , RES and M related mathematically?
    M = BCB + RES
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Samenvatting 3:

  • Macroeconomics
  • Manfred Gärtner
  • 9780273717904 of 0273717901
  • 3rd ed.

Samenvatting - Macroeconomics

  • 1.1 The issues of macroeconomics

  • Microeconomics
    Macroeconomics
    Income: revenue derived from work and assets
    Nominal income = prices P x real income Y
    Gross domestic product (GDP)
    Gross national product (GNP)
  • Rule of 72:
    As a rule of thumb, divide by 72 by the annual income growth rate (in per cent) to learn in how many years income doubles
  • 1.2 Essentials of macroeconomic accounting

  • Factors of production:
    all resources used in the production of goods and services: labour, capital goods such as machines, and natural resources such as oil.

    2 majors things that can go wrong with this process:

    1. firms may not use all available production factors to produce output, thus leaving factors idle in the form of unemployment or slack
    2. people may not want to buy all that is being produced, that is, demand may fall short of output
  • Barter economy: economy without money
  • Expenditure approach: measures aggregate output as the sum of all spending

    Income approach: adds up all incomes as the sum of all spending
  • 3 reasons why income received by households is not the same as demand for firms:

    1. People save
    2. Governments levy taxes
    3. People buy foreign goods
  • 3 forms of injections into circular flow:

    1. Firms invest
    2. Government spending
    3. Foreigners buy our goods
  • (S-I) + (T-G) + (IM-EX) = 0
  • Common threads in GDP data:

    1. Most countries still run sizeable budget deficits
    2. In most countries, private savings exceed private investment. This is one way of financing the government budget deficit
    3. About half of the countries shown here export less than they import. In those countries the net injection from the private and government sectors is neutralized by a net leakage of spending to other countries
  • Twin deficits: deficits in both government budget and the current account
  • Quantity equation: M x V = P x Y
  • Quantity theory of money: P x Y = V x M   V is fixed, so money supply determines nominal income
  • Aggregate supply curve: indicates how much output firms are willing to produce at various price levels
  • Balance of payments: records a country's trade in goods, services and financial assets with other countries
  • 3.1 The money market, the interest rate and the LM curve

  • Wat gebeurt er in de money market wanneer Y toeneemt?
    money demand shifts up
  • Why does i has to increase when Y increases in the money market?
    To keep money supply at the same level
  • What is the price of money?
    interest rate
  • What is the money demand function?
    L=kY-hi
  • What is the money supply function?
    M=M
  • What is the LM-curve function?
    i=k/h*Y-1/h*M
  • Does the LM curve shift when L changes?
    No
  • What happens to the LM curve if there is expansionary monetary policy?
    it shifts to the right
  • What happens with M when i becomes exogenous?
    it becomes horizontal
  • What happens to the LM curve when i becomes exogenous?
    it becomes horizontal
  • How can the lm curve shift with exogenous i?
    by changing the targeted interest rate
  • What is the monetary policy rule formula?
    M=M+a(i-i)
  • What happens if i > targeted i?
    M will decrease
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