# Introduction to Macroeconomics Gavin Cameron University of Oxford OUBEP 2006.

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Introduction to Macroeconomics Gavin Cameron University of Oxford OUBEP 2006

OXFORD UNIVERSITY BUSINESS ECONOMICS PROGRAMME2 introduction “Macroeconomics? Is that the one about the big things?” Macro helps you to: Read the FT Understand Ben Bernanke Think about China Understand your business environment Avoid country crises!

OXFORD UNIVERSITY BUSINESS ECONOMICS PROGRAMME3 five days of macro… Sunday (Introduction and the Long Run) Around the World in 60 Minutes Economic Growth Unemployment Monday (the Short Run) Short-run macroeconomic activity Short-run policy implication Unemployment and Inflation Guest Speaker: Jon Temple on Globalisation & Growth Tuesday (the Medium Run) The Open Economy Balance in the Open Economy Modern Macroeconomic Practice Guest Speaker: Linda Yueh on China Wednesday (International Issues) Free Trade Trade Barriers Oil Guest Speaker: Nick Crafts on the BRIC economies Thursday The Macro Project Day with OEF (green team to win!) Guest Tutor: Adrian Cooper

OXFORD UNIVERSITY BUSINESS ECONOMICS PROGRAMME4 syndicate modelling task In the land of Courytania, E=C+I+G+X-M and C=cYD where YD is disposable income (equal to Y at first). Solving the model (E*=Y) What is equilibrium income when I=20, G=10, X=50, M=50 and c=0.9? What is the marginal propensity to consume? Plot a diagram relating E to Y. What happens to income if I=30? What is the multiplier? Taxing the citizens What happens to equilibrium income if the government introduces a tax at rate t=0.1, so YD=Y-tY? Paying the moneylenders What happens to equilibrium income if I=20-10r where r=0.1, 0.05 and 0 respectively? Plot a diagram relating r and Y. Importing What happens to equilibrium income if M=20+0.1YD?

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