Just a few things from last night’s class (to reiterate): Updated slides have been posted. Quiz 2 will cover all of Chapter 4, and Chapter 5 up to page 104 (i.e., short-selling, forward price for an asset with no income and forward price for an asset with a known income). HW for next week includes [...]
A few announcements, since I’ve been receiving emails about this: For the quiz tomorrow (Quiz 1), you are only responsible for Chapters 1 to 3. You are not responsible for Chapter 4. We have not covered it in class, yet. For future reference: You will rarely (if ever) be held responsible for something that I [...]
Here’s the video we saw in class yesterday, along with a brief bio of Hans Rosling, the speaker: A professor of global health at Sweden’s Karolinska Institute, his current work focuses on dispelling common myths about the so-called developing world, which (he points out) is no longer worlds away from the west. … Rosling’s presentations [...]
I think I have discovered (thanks to several students who pointed it out to me yesterday) the source of the confusion that is causing you a lot of consternation. The problem lies in the notation of the real exchange rate. Specifically, it seems that the text book and the study guide use a notation that [...]
After reviewing all the various concepts we’ve covered in previous classes, we finally finished Chapter 6, and started with Chapter 7. To recapitulate: The important concepts from Chapter 6, are: Potential output Labor market equilibrium (using the marginal propensity of labor) The consumption function (and the marginal propensity to consume) The investment function (and the [...]
Investments and the Real Interest Rate We started out finishing up investments. From the last class, we saw that the investment function for the US, from 1990-2007 (based on my crude analysis) was as follows: I = 6,337 – 83.50r. Thus, I0 = $6,337 billion, and Ir = $83.50 billion. Here’s the original graph, with [...]
Today we reviewed the concepts of marginal productivity of labor and the marginal propensity to consume, from the last two classes. We then went on to talk about the investment (I) component of GDP: Y = C + I + G + NX. There are two ways in which economists categorize investments: Net vs. gross [...]
We reviewed the marginal product of labor and learned that for the production function for a firm, it is the slope of the tangent line at any point on the function. Remember that the firm’s production function graphs output vs. labor and the economy-wide production function graphs output vs. capital. This is because we are [...]
Preliminaries Today, we started out by talking about an article in this week’s New Yorker which reviews two books: “Predictably Irrational: The Hidden Forces That Shape Our Decisions” (Harper; $25.95), Dan Ariely “Nudge: Improving Decisions About Health, Wealth, and Happiness” (Yale; $25), Richard H. Thaler and Cass R. Sunstein We talked briefly about how, when [...]
Today we started with the “intermediate term” analysis of markets. This is basically a period of time which is not long enough to see the long-run growth of the Solow Growth Model, but is long enough so that wages and prices have a chance to adjust to equilibrium. It varies from anywhere between a quarter [...]