Intermediate Macroeconomics ECON 3020
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This 2 page Class Notes was uploaded by Nola Williamson on Monday September 21, 2015. The Class Notes belongs to ECON 3020 at University of Virginia taught by Chris Otrok in Fall. Since its upload, it has received 12 views. For similar materials see /class/209767/econ-3020-university-of-virginia in Economcs at University of Virginia.
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Date Created: 09/21/15
Introduction to Macroeconomics What constitutes a model Preferences Technology Optimization problem We use the model to study decision making by the people in our model economy Intratemporal Decisions the allocation of resources Within a time period Consumer utility maximization leads to workleisure tradeoff Firm pro t maximization leads to a labor decision Government how much to spend Intertemporal Decisions the allocation of resources across time Consumer consumption and savings decision Firm investment in future capital Government taX now or accumulate debt General Equilibrium Combine both consumer optimization problems with the rms two pro t maximization problems along with the governments spending and taX plan to solve for a set of equilibrium quantities and prices for the economy A change to the economic environment will be re ected in a new equilibrium set of prices and quantities For example a change in technology affects the rms optimization problem and will induce a change in the consumers labor choice through a change in the wage rate 2
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