1. Lectures in Macroeconomics- Charles W. Upton Incorporating Real Business Cycles

2. A Combined Graph P M Y S LR S SR D

3. Incorporating Real Business Cycles A Drought P M Y S LR S SR D A drought causes a decline in productivity

4. Incorporating Real Business Cycles Shift in Y f P M Y S LR S SR D YfYf Y fd

5. Incorporating Real Business Cycles Shift in P Curve P M Y S LR S SR D YfYf Y fd

6. Incorporating Real Business Cycles Shift in P Curve P M Y S LR S SR D YfYf Y fd The P curve comes about because of LS effects, not changes in A; A shift in A will also shift that curve

7. Incorporating Real Business Cycles A Digression P M Y S LR S SR D YfYf Y fd

8. Incorporating Real Business Cycles Shift in Y Curve P M Y S LR S SR D YfYf Y fd

9. Incorporating Real Business Cycles Shift in M Curve P M Y S LR S SR D YfYf Y fd

10. Incorporating Real Business Cycles Equilibrium P M Y S LR S SR D YfYf Y fd Inflation Y fd < Y < Y f U>U n

11. Incorporating Real Business Cycles The Ambiguity in R

12. Incorporating Real Business Cycles The Bottom Line P M Y S LR S SR D This is not a replacement, just a richer model

13. Incorporating Real Business Cycles End ©2006 Charles W. Upton. All rights reserved The picture: President George W. Bush meets with the 2004 Nobel Laureates in the Oval Office Dec. 1, 2004. Pictured with President Bush, from left, are Dr. Linda Buck, physiology and medicine; Finn Kydland, economics; Edward Prescott, economics; Frank Wilczek, physics; David Gross, physics; and Richard Axel, physiology and medicine. White House photo by Tina Hager