Macroeconomic Models. Tutorial Cluster 5. Screenshots

Description

Tutorial Cluster 5 of Macroeconomic Models includes tutorials 12 to 15 on the AD/AS model.

While tutorials 4 to 11 deal with the short run where wages and prices are fixed, tutorials 12 to 15 introduce the long run where wages and prices are flexible.

Tutorial 12 reviews important definitions of the wage level, the price level, inflation and deflation and explains some of the benefits and drawbacks of inflation and deflation.

Tutorial 13 introduces the AD/AS model that combines the IS/LM model with the model of the economys labor market to show the relationship between employment, the price level and equilibrium output and income. Tutorial 13 also defines demand shocks and supply shocks to the economy.

Tutorial 14 focuses on the effect of shocks to the economy. Demand shocks generate a wage/price spiral and a real balance effect that eventually close the output and employment gaps. The wage/price spiral and the real balance effect generated by a supply shock, eventually change potential output and structural employment.

Tutorial 15 explains how fiscal and monetary policies may be applied to speed up the closing of output and employment gaps generated by demand shocks. If the economy is hit by a negative supply shock, generating new and lower potential output and structural employment, policy makers are faced with a dilemma: Should macroeconomic policy support price stability or employment?


Key topics of Tutorial 12:

Wage and price levels vs. individual wages and prices.
Weighted averages; expenditure weights.
The CPI.
Defining inflation and deflation.
The negative and positive effects of inflation.
The real wage.
The inflation rate.
The target inflation rate.

Key topics of Tutorial 13:

Fixed vs. flexible wages and prices.
Deriving the AS curve from the labor market model.
Slope and position of the AS curve; shifts of the AS curve.
Deriving the AD curve from the IS/LM diagram.
Slope and position of the AD curve; shifts of the AD curve.
The Monetary Transmission Mechanism.
The Real Balance Effect.
Demand shocks; supply shocks.

Key topics of Tutorial 14:

Demand shocks and shifts of the AD curve.
Demand pull inflation.
The wage/price spiral and shifts of the AS curve.
The real balance effect and the restoration of
potential output and structural employment.
The long run AS curve, LRAS.
Supply shocks and shifts of the AS curve.
Cost push inflation.
The change in potential output and structural employment.
Stagflation.
Labor efficiency and the real wage.

Key topics of Tutorial 15:
Stabilization policies and the AD curve.
Negative demand shocks and expansionary fiscal or monetary policies.
Unemployment
Positive demand shocks and contractionary fiscal or monetary policies.
Inflation
A negative supply shock.
Policy makers dilemma: Supporting price stability vs. employment.
Incomes policy.
Increasing labor efficiency.

Tutorial Cluster 5 includes 4 out of 15 tutorials in macroeconomic models. The tutorials present macroeconomic models in a fabulous new, innovative and interactive design. The tutorials animated graphics with voice over goes beyond the static texts and graphics of traditional textbooks and e-books and introduce a wholly new and dynamic approach to learning economics.

The tutorials clarity and focused structure supported by case studies and an interactive design facilitates the understanding of macroeconomic models and their application to reality.

Macroeconomic Models lets you review a particular model in about 15 minutes or the main models of most P-of-M courses in less than 4 hours - on your iPad wherever and whenever you wish.

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