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Comprehensive Overview of Macroeconomics: Short, Medium, and Long-Run Dynamics

This course on Macroeconomics offers an in-depth exploration of economic principles across three distinct time frames: short-run, medium-run, and long-run. In the short run, concepts such as the IS/LM model and the spending multiplier are introduced. The medium run focuses on AD/AS analysis, the Phillips Curve, and the equilibrium rates of unemployment. Finally, the long run examines growth dynamics using the Cobb-Douglas function and the golden rule of saving. This course will empower students with a robust understanding of macroeconomic interactions and policy implications.

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Comprehensive Overview of Macroeconomics: Short, Medium, and Long-Run Dynamics

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  1. Macroeconomics The course is divided in three parts: Short -run / Medium-run / Long-run Short - run: IS / LM  AD LM: (M/P)d = (M/P)s (M/P)d = L(Y,i) Ms = [1/(c + r(1-c))]H = {money multiplier} x {monetary base} IS:Y = C + I + G C = c0 + c1 YD = c0 + c1 (Y - T) I = I0 + b1 Y - b2 i  Y = {spending multiplier} x {autonomous spending} Medium - run: AD/AS IS/LM  AD PS/WS  AS PS: P = (1+ μ)(W/A) WS: W= Pe Ae f(u,z)  SRAS and MRAS Phillips Curve + Okun’s Law + gm = gy + π  M policy • In medium - run, Pe = P  (W/P)WS = (W/P)PS = A / (1+ μ) • Natural/Structural/Equilibrium Rate of Unemployment (un ) • “Full - employment” rate of output (YFE)The Green Shaft When AD or AS shift: MR equilibrium  SR equilibrium P  new MR equilibrium Productivity and equilibrium rate of unemployment: Ae = A only in long - run  “Natural rate” decreases with unexpected increase in A Long - run: Growth Steady state: s(Y/AN) = (δ + gN + gA )(K/AN) For simple Cobb-Douglas function: Y = Kα (AN)1-α Y/AN = {s/((δ + gN + gA )}α/(1-α) Golden - rule saving rate = α

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