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Macroeconomic Analysis 2003

Macroeconomic Analysis 2003. Micro-Founded Macro: Graphical Illustrations. Micro-Foundation to Macro: General Equilibrium with a representative household and firm. Market p and w such that Y = C LD = LS LS +L = Lbar. Wage payment, wL. Labour supply, L. Economy. Households Max U(C,L).

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Macroeconomic Analysis 2003

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  1. Macroeconomic Analysis 2003 Micro-Founded Macro: Graphical Illustrations Lecture 23

  2. Micro-Foundation to Macro: General Equilibrium with a representative household and firm Market p and w such that Y = C LD = LS LS +L = Lbar Wage payment, wL Labour supply, L Economy Households Max U(C,L) Firms Max π(LS) Payments for goods Supply of Goods Lecture 23

  3. Classical view Lecture 23

  4. Classical economy: How perfectly flexible prices guarantee macroeconomic equilibrium in IS-LM Framework AS Lecture 23

  5. Open Economy Model: Equilibrium in Six Different Markets Lecture 23

  6. Keynesian Revolution (Short run analysis) Lecture 23

  7. Keynesian Economist’s view on Economic Policy Lecture 23

  8. Keynesian economy: flexed prices and possibility of underemployment equilibrium Lecture 23

  9. IS-LM and Aggregate Demand and Aggregate Supply Analysis Lecture 23

  10. Exercises • Show how the flexible prices guarantee full employment equilibrium in the classical model. • How under-full employment may persist in the Keynesian model? • Explain Keynesian, New Keynesian and Classical Model using ISLM and AS-AD diagrams. Lecture 23

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