Macroeconomic Models & Policy

Introduction to Macroeconomics

Class Power Point - click here

Homework # 1 - Government & Macroeconomic Policy

Reading - Government & Macroeconomic Policy - click here

Class Power Point on Mechanics of Macroeconomic Policy - click here

Classwork # 1 - Tax Systems

Homework # 2 - Model of the Macroeconomy

Reading - Aggregate Supply-Aggregate Demand Model - click here

Class Power Point on the AS-AD Model - click here

Video - Parts of the AS-AD Model - click here

Video - Macroeconomic Shocks in the AS-AD Model - click here

Video - Return to General Equilibrium in the AS-AD Model - click here

Article - Four Basic Truths of Macroeconomics - click here

Classwork # 2 - Working With the AS-AD Model

Homework # 3 - Macroeconomic Policy in the AS-AD Model

Reading - Macroeconomic Policy in Aggregate Supply-Aggregate Demand Model - click here

Class Power Point - click here

Working with Macro Policy in the AS-AD Model

Macro Policy in AS-AD Model Classwork Sheet - click here   (Answers)

For each of the following economic events listed below, identify whether it is a:

Demand or Supply Shock

Impact on Inflation, GDP and Unemployment

Speed at which the economy adjusts to the shock

How government spending, taxes and interest rates can be changed to deal with the economic shock 

Homework # 4 - Review Macroeconomics and Policy  (Answers)

Printable Copy of Assignment - click here

Sample Problems with Answers - click here

Working with Fiscal Multipliers Classwork Sheet - click here (Answers)

The government spending multiplier and the tax multiplier as shown below.  Use this information to answer the following questions.

Government Spending Multiplier = 1/MPC        Tax Multiplier = MPC/ (1-MPC)

A.  What is the multiplier if an economy has a MPC of 0.9? ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­

B.  What is the multiplier if an economy has a MPC of 0.7?

C.  What is the tax multiplier for an economy with an MPC of 0.7?

D.  An economy has an MPC of 0.8 and government spending increases by $100 billion – How much will GDP change?

E.  An economy has an MPC of 0.75 and government spending is reduced by $100 billion – How much will GDP change?

F.  An economy has an MPC of 0.75 and taxes are reduced by $100 billion – How much will GDP change?

G.  An economy has an MPC of 0.75 and currently has a GDP output gap of $20 billion - how large of an increase in government would be needed to close the output gap? 

H.  An economy has an MPC of .75 and currently has a GDP output gap of $20 billion - how large of a tax cut would be needed to close the output gap? 

Homework # * - Macroeconomic Policy Debate

Reading - Macroeconomic Policy Debate - click here

Class Power Point - click here