Economics Sample Unit 4 Macroeconomics Document Set

Macroeconomic Measures GDP Consumer spending (C) Investment (I) Fixed Capital Real Estate Excess Inventories Government Spending (G) Net Exports (X-M) Exports (X) Imports (M) Unemployment Cyclical Frictional Structural Seasonal Inflation Consumer Price Index (CPI) Producer Price Index (PPI) GDP Deflator

The Macro Economy

Foreign Sector Savings Government

CPI- All, Medical Care, & Apparel https://fred.stlouisfed.org/graph/?g=1AxN

CPI for all Urban Consumers https://fred.stlouisfed.org/graph/?g=eYT

Inflation Graphic Organizer

Aggregate Demand Total Spending in the Economy Nominal Spending= C+I+G+Xn (X-M)

Aggregate Supply Total Production for an Economy

Short Run Macro Equilibrium

Long Run Aggregate Supply=PPC Production Point “A” is at Full Employment

Economic Growth =

Full Employment Production Current production (Yfe) at Full Employment

Recessionary Gap Current Production (Ye) below Full Employment

Inflationary Gap Current Production (Ye) above Full Employment

https://research.stlouisfed.org/dashboard/7191

Business Cycle Peak- Highest point in the Business Cycle Contraction- Stage in which the economy has declining Real GDP Recession- Two quarters (6 Months) of declining Real GDP Trough- Lowest point of the Business Cycle Recovery- Signals end of a Recession with increasing Real GDP Expansion- Growing economy until it reaches a Peak

The Real Business Cycle https://fred.stlouisfed.org/series/GDPC1

The Federal Reserve System https://commons.wikimedia.org/wiki/File:FederalReserve_System.png

Monetary Policy Recession Buy Bonds Increasing the Money Supply Inflationary Gap Sell Bonds Decreasing the Money Supply Raise the Discount Rate Raise the Reserve Requirement Raise Interest on Reserves Monetary Policy Recession Buy Bonds Increasing the Money Supply Lower the Discount Rate Lower the Reserve Requirement Lower Interest on Reserves Goals of The Federal Reserve Price Stability Full Employment

Fiscal Policy Recession: Decrease Taxes Increase Government Spending Deficit Spending = Increases Long Run Debt Inflationary Gap Increase Taxes Decrease Government Spending Surplus= Decreases Long run Debt Expansionary Fiscal Policy Contractionary Fiscal Policy

Federal Budget- Deficit https://upload.wikimedia.org/wikipedia/commons/e/e1/CBO_Infographic_2016.png