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Gregory Mankiw
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CHAPTE
R
SEVENTH EDITIO
MACROECONOMICS
Outline of model
Dalam ekonomi tertutup (closed economy),
market-clearing model:
National Income
Equilibrium
Faktor-faktor produksi
K = capital:
tools, machines, and structures used
in production
L = labor:
the physical and mental efforts of
workers
CHAPTER 3
National Income
National Income
National Income
constant returns to
scale for any z > 0
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National Income
decreasing returns
to scale for any z
>1
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National Income
increasing returns
to scale for any
z>1
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National Income
10
CHAPTER 3
National Income
11
Determining GDP
Output ditentukan oleh penawaran faktor
produksi yang tetap dan teknologi yang tetap:
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National Income
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National Income
13
Notation
W
W ==nominal
nominalwage
wage
RR ==nominal
nominalrental
rentalrate
rate
PP ==price
priceofofoutput
output
W
W/P
/P ==real
realwage
wage
(measured
(measuredininunits
unitsofofoutput)
output)
RR/P
/P ==real
realrental
rentalrate
rate
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National Income
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National Income
15
Basic idea:
Perusahaan menggaji setiap unit tenaga kerja
jika biaya tidak melebihi manfaat yang
diperoleh.
cost = real wage (w/p)
benefit = marginal product of labor (MPL)
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National Income
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National Income
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MPL
As more labor
is added, MPL
MPL
1
MPL
1
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National Income
Slope of the
production function
equals MPL
L
labor
18
Intuition:
Suppose L while holding K fixed
fewer machines per worker
lower worker productivity
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National Income
19
Real
wage
MPL, Labor
demand
Units of labor, L
Quantity of labor
demanded
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National Income
20
equilibrium
real wage
Labor
supply
MPL, Labor
demand
Units of labor, L
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National Income
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National Income
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equilibrium
R/P
Supply of
capital
MPK, demand
for capital
Units of capital, K
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National Income
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national
income
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National Income
labor
income
capital
income
25
Labors
Labors share
share of
of income
income
is
is approximately
approximately constant
constant over
over time.
time.
(Thus,
(Thus, capitals
capitals share
share is,
is, too.)
too.)
National Income
27
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National Income
28
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period
productivity
growth
real wage
growth
1959-2007
2.1%
2.0%
1959-1973
2.8%
2.8%
1973-1995
1.4%
1.2%
1995-2007
2.5%
2.4%
National Income
29
Outline of model
A closed economy, market-clearing model
Supply side
DONE
factor markets (supply, demand, price)
DONE
determination of output/income
Demand side
Next determinants of C, I, and G
Equilibrium
goods market
loanable funds market
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National Income
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National Income
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Consumption, C
def: Disposable income is total income minus
total taxes:
Y T.
Consumption function: C = C (Y T )
Shows that (Y T ) C
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National Income
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C (Y T )
MPC
1
YT
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National Income
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Investment, I
The investment function is I = I (r ),
where r denotes the real interest rate,
the nominal interest rate corrected for inflation.
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National Income
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Spending on
investment goods
depends negatively on
the real interest rate.
I (r )
I
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National Income
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Government spending, G
G = govt spending on goods and services.
G excludes transfer payments
(e.g., social security benefits,
unemployment insurance benefits).
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National Income
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depends negatively on r,
the price of loanable funds
(cost of borrowing).
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National Income
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The
The investment
investment
curve
curve is
is also
also the
the
demand
demand curve
curve for
for
loanable
loanable funds.
funds.
I (r )
I
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National Income
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National Income
41
Types of saving
private saving = (Y T ) C
public saving
T G
national saving, S
= private saving + public saving
= (Y T ) C +
=
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TG
Y C G
National Income
42
(YT ) = Y T , so
C
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= MPC (Y T )
= MPC Y MPC T
National Income
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S, I
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Equilibrium real
interest rate
I (r )
Equilibrium level
of investment
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National Income
S, I
48
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Eqm in L.F.
market
National Income
Eqm in goods
market
49
National Income
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National Income
51
CASE STUDY:
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National Income
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CASE STUDY:
National Income
r2
r1
I (r )
I2
I1
S, I
53
1970s
1980s
TG
2.2
3.9
19.6
17.4
1.1
6.3
19.9
19.4
National Income
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r2
An increase
in desired
investment
r1
But the equilibrium
level of investment
cannot increase
because the
supply of loanable
funds is fixed.
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National Income
I1
I2
S, I
56
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National Income
57
r2
r1
I(r)2
I(r)
I1 I2
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National Income
S, I
58
Crisis
National Income
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Crisis
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Crisis
A few details on the financial crisis:
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Chapter Summary
Total output is determined by:
the economys quantities of capital and labor
the level of technology
Competitive firms hire each factor until its
marginal product equals its price.
Chapter Summary
A closed economys output is used for:
consumption
investment
government spending
The real interest rate adjusts to equate
the demand for and supply of:
goods and services
loanable funds
Chapter Summary
A decrease in national saving causes the
interest rate to rise and investment to fall.