The first gap is that between savings and investments in the economy. These study guides continue the innovative and committed attempt by the department of basic education to improve the academic performance of grade 12 candidates in the national senior certificate nsc examination the second edition of mind the gap is aligned to. Contents an explanatory note vii in which the origins of this book are clari. Scarcity and choice 25 3 demand, supply, and market equilibrium 47 4 demand and supply applications 79 part ii concepts and problems in macroeconomics 97 5 introduction to macroeconomics 97 6 measuring national output and national income 111 7.
Increase in nominal income introduction to macroeconomics topic 3. Macroeconomic analyses the behaviour of the whole economic system in totality or entirety. In other words, macroeconomic studies the behaviour. Macroeconomics macroeconomics join mailing list filter results. Throughout this book, a number of terminological and mathematical conventions will be used. Here, i think it is up to the instructor to draw out the mapping between old and new language whenever it might be useful to do so. Mind the gap study guides department of basic education.
A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. The difference between macroeconomics and microeconomics macroeconomics includes those concepts that deal with the entire economy or large components of the economy or the world. Distinction between inflationary and deflationary gap at the equilibrium level of income. The box on the left indicates a consensus of what are the most important goals for the macro economy, the middle box lists the frameworks economists use to analyze macroeconomic changes such as inflation or recession, and the box on the right. The twogap model posits that developing economies face two gaps in their economy which they have to fill. There are many ne textbooks for macroeconomics at the intermediate level currently available. Macroeconomics is the branch of economics which seeks to model the economy as a whole. Macroeconomics, monetary policy, and the crisis 5 macroeconomics, monetary policy, and the crisis joseph e. The department of basic education has pleasure in releasing the second edition of mind the gap study guides for grade 12 learners. Let us learn about inflationary and deflationary gap. Distinction between inflationary and deflationary gap at. You can use all your materials textbooks, notes, programmes. We can see in the diagram below, that the economy is operating a level a below the yf full level of employment.
Deflationary gap is the difference between full level of employment and the actual level of output of the economy. Financial crisis inquiry commission in its 2011 report 1, as well as a broad range of economists. Economic fluctuations and growth program, monetary economics program we use bayesian methods to estimate two models of post wwii u. Gap analysis gap analysis consists of 1 listing of attributes, competencies, andor performance levels of the present situation what is, 2 cross listing factors required to achieve the future objectives what should be, and then 3 highlighting the gaps that exist and need to be filled. A developing country starts off with very low savings, but it has to e. Economics 212 principles of macroeconomics study guide david l. This model was set up to study a closed economy, and we will assume that there is a constant population. Each chapter of macroeconomics, 21st edition, contains updated data reflecting the current economy, revised learning objectives, and reorganized and expanded endofchapter content. So, you typically list out the organizations current state, its desired state, and a comprehensive plan to fill out the gap between these two states. Inflationary gap is the amount by which the actual aggregate demand exceeds aggregate supply at level of full employment. The appropriate keynesian response to an inflationary gap is shown in figure 1b. Inflationary and deflationary gapsrecessionary gap. This concept may be used to measure the pressure of inflation.
A brief overview of the history of macroeconomics i classics smith, ricardo, marx did not have a sharp distinction between micro and macro. Keynes, the general theory of employment, interest, and money 1936. This theory can now be used to analyse the concept of inflationary gap a concept introduced first by keynes. An aggregate is a multitude of economic subjects that share some common features. This book can also be appropriate for all readers within the area of macroeconomics. If ae 0 shifts down to ae 1, so that the new equilibrium is at e 1, then the economy will be at potential gdp without pressures for inflationary price. Schools of thought the field of macroeconomics is organized into many different schools of thought, with differing views on how the markets and their participants operate. Recent journal of macroeconomics articles elsevier. Preface to the revised and expanded edition xi introduction. Ap macroeconomics studyguide basic terms for economics economics. Macroeconomics 1880 1900 1920 1940 1960 1980 2000 matthiasdoepke universityofchicago andreaslehnert boardofgovernorsofthe federalreservesystem andreww. Brief contents part i introduction to economics 1 1 the scope and method of economics 1 2 the economic problem.
Strategic report sagegroup, llp 5 changes and through the strong performance of the new old navy brand. An inflationary gap is a type of economic gap where a countrys real gross domestic product is higher than its potential gross domestic productin other words, when the real aggregate demand is higher than the projected aggregate demand if the economy were operating at full employment. Flows flow stock a stock is a quantity measured at a point in time. In macroeconomics, the term investment is reserved for purchases by firms of capital machines, buildings, etc and purchases by households of some durable goods such as housing. Keynesian macroeconomics argues that the solution to a recession is expansionary fiscal policy. Introduction to the macroeconomic perspective principles.
This might be achieved by changing the objectives, or by changing strategy at the. Stabilization and growth what people truly care about is the stability and growth of their real incomes. Most modern dynamic models of macroeconomics build on the framework described in solows 1956 paper. This means that the citizens of the country are demanding more goods and services than the. Cover the book with protective material, such as plastic, old newspapers or magazines. Gap analysis is concerned with why the gap occurs and the development of measures for reducing or eliminating it. Economics 212 principles of macroeconomics study guide. However, the gap line of stores was still experiencing declines in sales. In an economy that grows over time the absolute output gap y. The gdp gap is defined as the difference between potential gdp and real gdp. A short course in introductory macroeconomics not to be circulated.
The old navy brand named by drexler after a bar he saw in paris debuted in 1994, and focused on providing quality clothing basics at a good value. Introduction to macroeconomics lecture notes robert m. The nations unemployment rate, inflation rates, interest rates, federal government budgets and government fiscal policies, economic growth, the federal reserve system. This book represents a substantial makeover and extension of the course notes for intermediate macroeconomics which have been provided publicly on eric simss personalwebsitefor several years. Ch 23 measuring a nations income introduction microeconomics studies how households and firms make decisions and how they interact in markets. This includes regional, national, and global economies while macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline. Explain and illustrate graphically recessionary and inflationary gaps and relate these gaps to what is happening in the labor market. Keynes in his famous book general theory put forward an analysis of unemployment and inflation. The hidden side of everything 1 in which the book s central idea is set forth. This is a book designed for use in an intermediate macroeconomics. When the economy falls into recession, the gdp gap is positive, meaning the economy is operating at less than potential and less than full employment. Ian irvine is a specialist in microeconomics, public economics, economic.
To explain the approach and content of macroeconomics, word macro is derived from the greek word makros meaning large and therefore macroeconomic is concerned with the economic activity in the large. The standard model that is used to summarize the way in which the level of output is. Inflationary and deflationary gaps, definition and graph. Citescore values are based on citation counts in a given year e. The following terms are used by different authors to refer to this assumption. Key components of gap analysis as said earlier, gap analysis compares the gap between an organizations actual performance against its potential performance. Abel, bernanke, and croushore current macroeconomic concept in a method that prepares college students to research actual macroeconomic data utilized by coverage makers and researchers. Study macroeconomics online free by downloading openstaxs principles of macroecnomics 2e textbook and using our accompanying online resources.
Take good care of this textbook this textbook is the property of your school. The prefix macro means large, indicating that macroeconomics is concerned with the study of the market system on a large scale. What is the two gap model in development economics. Ap macroeconomics studyguide basic terms for economics. An inflationary gap is a macroeconomic concept that describes the difference between the current level of real gross domestic product gdp and the anticipated gdp that would be. This book is meant for the intermediate macroeconomics course. A catalogue record for this book is available from the british library library of congress cataloginginpublication data a catalog record for this book is available from the library of congress isbn. Why is average income high in some countries and low in others. Identify the various policy choices available when an economy experiences an inflationary or recessionary gap and discuss some of the pros and cons that make these choices controversial. You will process empirical data on computers and answer the questions. This is recessionary and inflationary gaps and longrun macroeconomic equilibrium, section 7. The keynesian theory assumes that a maximum level of national output can be obtained at any particular time in the economy. Like microeconomics, macroeconomics is a social science. Macroeconomics considers the aggregate performance of all markets in the market system and is concerned with the choices made by the large subsectors of the economythe household sector, which includes all consumers.
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