Macroeconomics
Unemployment Part 1
Aug 18th
Syllabus requirements (first part):
Unemployment
• Full employment and underemployment
• Unemployment rate
• Costs of unemployment
• Types of unemployment
• structural
• frictional
• seasonal
• cyclical/demand-deficient
• real wage
(Macro) Episode 18: Unemployment by mjmfoodie
(Macro) Episode 19: Types of Unemployment by mjmfoodie
Unemployment – Description of different types by jcsballoon
The Multiplier, Accelerator and Crowding Out
Aug 17th
These are Higher Level Extension Topics, and are listed in the following way on the 2005 IB syllabus:
• Multiplier
[including calculation of multiplier]
• Accelerator
• “Crowding out”
Here are some video resources and questions to help you understand these concepts.
Watch the following video and then answer the questions underneath.
MPC and the Multiplier by FitzEcon
1) Define the MPC?
2) What is the formula for the multiplier?
3) Define the MPS.
4) Record, in writing / notes, the example given by the speaker.
5) Extension – Check your text book’s entry and enhance your explanation of the multiplier, with particular attention to the concept of ’rounds’
Fiscal policy and the multiplier effect by pajholden
6) Why, in the example given, does the government want to boost Aggregate Demand?
7) What would be the trade-off of this economic goal?
8] Demonstrate the above on a sketch diagram.
9) What two fiscal policy options does the government have?
10) What does the theory of the multiplier effect state? (add to previous explanation)
11) Briefly summarise the example given of how an initial increase in spending on healthcare by the government leads to further increases in AD.
12) What are the difficulties mentionned which are associated with the multiplier effect?
13) Extension – think about it – why might cutting tax be different in terms of the impact on the multiplier compared to increasing government spending by the same amount of money?
MEC and Accelerator investment theories by pajholden
NOTE You only need to focus on the Accelerator Theory (4 mins 16 secs onwards) for HL IB Economics (although it is harmless to view the MEC theory section)
14) What are the two types of investment mentionned – explain the difference.
15) What is the Accelerator Theory in basic terms.
16) Enhance your notes by checking your text book and following links:
http://tutor2u.net/economics/revision-notes/as-macro-multiplier-accelerator.html
Bottom of this page: http://econ.la.psu.edu/~dshapiro/l18nov04.htm
http://cafehayek.com/2010/02/crowding-out.html
Crowding Out
Research and summarise information to include the following features under the topic of ‘crowding out’. Two useful videos and a slideshow are given at the end.
- Definitions
- Explanation of what it is
- Examples
- Diagrams
- Outline the difference between complete, partial and no crowding out.
(Macro) Episode 27: Crowding Out & Lags by mjmfoodie
Note that from c. 2mins 50 secs moves on to time lags – it is good revision of this separate topic!
A helpful animated slideshow:
Crowding Out Effect by reffonomics.com – click here
And finally, this is pure genius! …
Crowding-Out Effect Song (Heavy Metal Edition) by medicotube
What Are Supply Side Policies?
Nov 23rd
Image: Some rights reserved by Re-Entry One Stop
Here is a simple activity that could be completed as a class.
Visit this site to see a list of 12 supply side policies:
http://www.economicshelp.org/macroeconomics/economic-growth/supply-side-policies.html
In pairs or ones, create a cartoon to explain one policy from the list of 12. Your cartoon should be designed to make the idea easy to understand.
Remember to add speech bubbles and appropriate characters / setting to give the policy some meaning. Add a title that matches the policy itself.
I recommend you use toondoo which is easy to use and quick and free to sign up for.
If you use this particular piece of online software, you can share it as a public comic book so that it can then be embedded on a website.
Looking for an example of toondoo? Here is a great cartoon by my colleague Maree (this one introduces three different economic systems):
Output– Definitions of GDP
Oct 28th
These mjmfoodie videos are very useful for understanding the concepts of GDP, real GDP (as opposed to nominal/money GDP) and growth.
The Circular Flow Of Income
Sep 9th
To view an excellent introductory animation to introduce the concept of the circular flow of income, visit this page from the excellent Macroeconomics, Manfred Gärtner, Resources For Students site. A large copy of the same flash file is here.
A couple of youtube videos should also help explain this model.
First the long one:
Source: lousycracker
And now a shorter video:
Source: BrynJonesOnline
Source: jodiecongirl – best suited to A-Level or IB students
Video: Circular Flow of Income – Macroeconomics [pajholden – best suited to A-Level or IB students]
Once you think you’ve begun to understand it, you can explore an interactive circular flow for yourself, also from the above mentioned Manfred Gärtner site. Click here.
S-Cool website gives quite a detailed explanation, best suited to A-Level or IB students here.
The Economic Health Of A Country
Aug 26th
[License: Some rights reserved by juhansonin]
As we begin to explore macroeconomics, it is worth thinking about some of the key things that we will be looking at and how they apply to a real life country.
Economists agree that there are four main macroeconomic goals which most governments consider when managing their economy (and some governments, as we know, manage their economies more directly than others). The four macroeconomic goals are:
1) Growth (an increase in the country’s total output)
2) Low Unemployment (or put another way, high employment)
3) Stable General Price Level (while it is accepted that a small amount inflation is manageable, both high inflation and deflation are seen to be undesirable).
4) A Healthy Balance of Payments (for example, importing more goods and services than those that a country exports can be seen to be undesirable in the long run).
Sometimes, a fifth macroeconomic goal is added, although we should recognise that it clearly appears to be of variable importance to the different governments of the world:
5) Equity (an even distribution of wealth within the country)
There are other macroeconomic goals that are sometimes considered which you may come across in your research.
A good research task is to consider these macroeconomic goals for a country and gather data on a number of economic indicators for your country. Examples of such indicators include:
- GDP and / or GNP
- GDP per capita / and or GNP per capita
- Rates of Inflation
- Interest Rates
- Unemployment Levels
- Balance of Trade (Imports versus Exports)
- Distribution of Wealth
You could choose a country that has signed up to the OECD. What does that stand for, and why would a country want to belong to this organisation?
Look at the economic health for your chosen country over the past ten years. Gather text, images and even video links to support your findings. If you can, try to see why they changes but don’t worry about this too much – this can be complicated and we haven’t even studied the theory yet.
A great way to present your findings would be to produce a ‘glog’ or online poster. You can host your glogs at http://www.glogster.com/ and teachers can even set up accounts for their class here: http://edu.glogster.com/
Make your glog as informative as possible. Try to mix up text, images, graphs and tables and possible short video clips (from youtube for example). Remember to give a title and explain your chosen country’s membership of the OECD.
