AS.180.101 Lecture Notes - Lecture 25: John Maynard Keynes, Federal Funds Rate, Phillips Curve
Document Summary
Lecture #26: final lecture macroeconomic principles; summary lecture (reading: rjb notes?) Unemployment today 5. 8% - much much stronger report we were expecting: fed will presumably tightening somewhat earlier. We get data this morning that indicate us economy is moving in a good place. The dollar should go up in relation to the japanese currency and the euro! Immediately, 2% move in the yen immediately (at 8:31am, right after jobs report came out) Rational decisions made at the margin: on economic matters, we make this assumption that people are rational and they make decisions at the margin (cost versus benefit, marginal analysis. Concclusion: we have an invisible hand, but it is not an infallible hand, we have to intervene in some way! 5-7 years (business cycle) versus 50 years (long run trends) Gdp is flow concept; stock is how much we accumulate over time: stock versus flows. Absolute versus comparative advantage: opportunity cost bears on comparative advantage.
