New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Week 10 Notes Econ 322

by: Tulsi

Week 10 Notes Econ 322 Econ 322

GPA 3.954

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Econ 322 Hauk intermediate macroeconomic theory week 10 notes
Intermediate Macroeconomics
Class Notes
Econ, Macro, usc, hauk, Intermediate, Theory, Economics, Macroeconomics, macroeconomic theory
25 ?




Popular in Intermediate Macroeconomics

Popular in Economcs

This 2 page Class Notes was uploaded by Tulsi on Thursday March 24, 2016. The Class Notes belongs to Econ 322 at University of South Carolina taught by Hauk in Spring 2016. Since its upload, it has received 12 views. For similar materials see Intermediate Macroeconomics in Economcs at University of South Carolina.


Reviews for Week 10 Notes Econ 322


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 03/24/16
Week 10 Exam 2: Ch 6, 13, 14, 8 Tuesday, March 22, 203:16 PM Economic Stabilization Policy 1) Should macroeconomic policy be active or passive? Ignorance, Rational Expectations, and the "Lucas Critique" by Robert Lucas -economic expectations are important economic variables -good economic forecasts have to take into account how changes in policy will change expectations -economic forecasting is hard to do well 2) Should macroeconomic policy be conducted by discretion or by rule? Policy by rule-if policy makers announce in advance how macroeconomic policy will respond to particular situations Policy by discretion-if policy makers are free to determine how macroeconomic policy will respond to particular situations at the time The case for Policy by Rule: 1) Distrust policymakers or the political process a. -incompetence b. Capture by special interest groups c. Re-election motive leads to political business cycle Time Inconsistency Problem -monetary policy: central bank might benefit in the long-run from having policy discretion taken away Monetary Policy Rules -Money supply growth rule by Milton Friedman -money supply increase at a constant low rate every year (2%) MV = PY Y increases about 2% a year Nominal GDP Target -nominal GDP = P*Y -%change in nominal GDP = %change in price level (inflation) + %change in real GDP -%∆nominal GDP = P/∆ + Y/Y∆ -to increase inflation, increase the money supply -to decrease inflation, decrease the money supply Inflation Target -keep inflation below 2% -keep inflation expectations low (stable) -handle demand shocks well (keep Aggregate Demand stable) -does not handle supply shocks well (could cause a big recession) Central Bank Independence -how independent is the central bank? -to what extent can it influence the economy? New Section 4 Page 1 END OF EXAM 2 MATERIAL Consumption Y = C + I + G C = c0+ c(Y-T) Keynes Model MPC = C∆ ∆ = c 0<c<1 (marginal propensity to consume) APC (average propensity to consume) = C/Y = c /Y + c 0 If Y increases, APC increases If Y decreases, APC decreases Secular Stagnation Hypothesis If Y increases a lot, APC will fall a lot C2 Y2 + (1+r) Y1 Intertemporal Consumption Function -people live for 2 periods Slope = Indifference curve -people can save and borrow across periods -(1+r) Y2 -Income in period 1 is Y1, income in period 2 is Y2 Intertemporal budget constraint -Maximize utility across both periods subject to a budget constraint -divide consumption across 2 periods C1 Y1 Y1 + Y2/(1+r) (1+r)PV = FV PV = FV/(1+r) Borrow = .5/(1+r) New Section 4 Page 2


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Allison Fischer University of Alabama

"I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.