宏觀經(jīng)濟(jì)學(xué)課件

Chapter1:ATouroftheWorld1-1:TheUnitedStates1-2:TheEuropeanUnion1-3:JapanandEastAsia1-4:China1-5:TheCoreContentofMacroeconomics1-6:LookingAhead*1-1:TheUnitedStatesIsUnemploymentTooLow?IstheStockMarketTooHigh?WhyHasGrowthSlowedDown?WhyHasWageInequalityIncreased?2003-6-22*HowtoLookataneconomyWhenweLookataneconomy,macroeconomistsfocusonfirstthreemeasures:●Output,thelevelofproductionoftheeconomyasawhole,anditsrateofgrowth●Theunemploymentrate,theproportionofworkersintheeconomywhoarenotemployedandarelookingforajob.●Theinflationrate,therateatwhichtheaveragepriceofthegoodsintheeconomyisincreasingovertime.2003-6-22*Growth,Unemployment,andInflationintheUnitedState,1960-1999(inpercent)1960-1998199719981999200020012002Outputgrowthrate3.13.93.93.63.30.32.9Unemploymentrate6.04.94.64.24.04.85.8Inflationrate4.01.91.01.11.91.41.02003-6-22*1-2:TheEuropeanUnionHowtoReduceHighUnemployment?WhatWilltheEuroDoforEurope?2003-6-22*Growth,Unemployment,andInflationintheEuropeanUnion,1960-1999(inpercent)1960-1998199719981999Outputgrowthrate3.12.72.81.9Unemploymentrate6.411.210.510.1Inflationrate5.71.81.81.72003-6-22*1-3:JapanandEastAsia1WhatHasJapanDoneSoPoorlyinthe1990s?WhatWastheCauseoftheAsianCrisisof1997?2003-6-22*Growth,Unemployment,andInflationinJapan,1960-1999(inpercent)1960-1997199719981999Outputgrowthrate5.80.8-2.8-0.9Unemploymentrate1.93.44.14.9Inflationrate4.80.60.4-0.72003-6-22*OutputGrowthinEastAsianCountriesandDistricts,1970-1999(inpercent)1970-1997199719981999HongKong7.55.2-5.1-1.3Singapore8.27.51.50.5Korea8.45.5-5.52.0Taiwan8.36.84.93.9Indonesia6.84.7-13.7-4.0Malaysia7.47.8-6.80.9Philippines3.65.1-0.52.0Thailand7.5-0.41.03.0China9.18.87.87.12003-6-22*1-4:ChinaGDPinChina1952-2002GDPGrowthRateinChina1953-2002InflationRateinChina1978-2002TheSumofTradeandProportioninGDP2003-6-22*Appendix:GDPinChina1952-2002YearGDPYearGDPYearGDPYearGDP195267919651716.119783624.1199121617.819538241966186819794038.2199226638.1195485919671773.919804517.8199334634.4195591019681723.119814826.4199446759.41956102819691937.919825294.7199558478.11957106819702252.719835934.5199667884.61958130719712426.419847171199774462.61959143919722518.119858964.4199878345.21960145719732720.9198610202.2199981910.91961122019742789.9198711962.5200088246.819621149.319752997.3198814928.320019593319631233.319762943.7198916909.220021023981964145419773201.9199018547.920032003-6-22*Figure:GDPinChina1952-20022003-6-22*Appendix:GDPGrowthRateinChina1953-2002YeargrowthrateYeargrowthrateYeargrowthrateYeargrowthrate1952196517197811.719919.2195311.5196610.719797.6199214.219544.21967-5,719807.8199313.519556.81968-4.119815.2199412.6195615196916.919829.1199510.519575.1197019.4198310.919969.6195821.319717198415.219978.819598.819723.8198513.519987.81960-0.319737.919868.819997.11961-27.319742.3198711.6200081962-5.619758.7198811.320017.3196310.21976-1.619894.120028196418.319777.619903.8Average:7.92003-6-22*Figure:GDPGrowthRateinChina1953-20022003-6-22*Appendix:InflationRateinChina1978-2002YearInflationRateYearInflationRateYearInflationRate19780.719877.319966.119792198818.519970.819806198917.81998-2.619812.419902.11999-319821.919912.92000-1.519831.519925.42001-0.819842.8199313.22002-1.319858.8199421.7Average:5.3419866199514.82003-6-22*Figure:InflationRateinChina1978-20022003-6-22*Appendix:TheSumofTradeandProportioninGDPYearSUM(RMB)ProportionInGDP(%)YearSUM(RMB)ProportionInGDP(%)1978355.09.8199523499.940.21980570.012.6199624133.835.619852066.723.1199726967.236.219905560.130.0199826857.734.319917225.833.4199926896.332.819929119.634.2200035368.640.1199311271.032.5200138021.339.6199420381.943.6200246309.945.22003-6-22*1-5:TheCoreContentofMacroeconomicsThelongruneconomicgrowthBusinesscycleUnemploymentInflationInternationaleconomicThepolicyofmacroeconomiceconomic2003-6-22*ThelongruneconomicgrowthTowatchtheworld,wecandiscoverthatthereareabigdifferentaboutcitizenlifeinthedifferentnation.Explainitfrommacroeconomics,thebasicreasonthatthelongruneconomicgrowthrateisdifferentindifferentcountry.Itgoeswithoutsaying,theincreasingoflaborforcesisaheadspringforthelongruneconomicgrowth.Butthemostimportantheadspringforthelongruneconomicgrowthsurelycomesfromtheimprovingoflaborproductivity.2003-6-22*Diagram:TheeconomicgrowthtrackintheUnitedStatessince1870ThechangeoftheUnitedStates'slaborproductivitysince1900BusinesscycleItisimpossibleforanyacountrytokeepachangelesseconomicgrowthrate.RegardingtheUnitedStatesastheexample:In1929-1933thatthebigdepressedperiod,theoutputleveldescendednear30%.Intheperiod1939-1944,becausetheUnitedStatestookpartintheSecondWorldWar,andtheoutputalmostturnoveratimes.After1945,theeconomyofUnitedStatesrunrelativelysteady,butstillundergodeclinesuchas1973-1975,1981-1982,1990-1991.Macroeconomistsusethetermofbusinesscycletodescribethiskindofsharpexpandandcontractinshort-termeconomicactivities.2003-6-22*TheoutputfluctuationintheUnitedStates,1950-1990UnemployedWheneconomyundergorecession,theunemploymentratewillincrease.Theunemployment,economicgrowthandbusinesscyclealltogethermakeupofthecorecontentofmacroeconomics2003-6-22*ThechangeabouttheunemploymentrateintheUnitedStates,1890-1990InflationInflationisasustainedriseinthegenerallevelofprices.Theinflationrateistherateatwhichthepricelevelincreases.Itisaimportanttaskformacroeconomicstodiscussaboutthecauseoftheinflationemergeandtheeffectofinflation2003-6-22*InternationaleconomyIntheopeneconomy,acountrymacroeconomicsurelybeaffectedbytheinternationaleconomicsituation.Forexample,inthecircumstancethatwidespreadforeigntrade,inflationwillbetransmitamongthestate-to-state.Thetradesurplusandtradedeficitwillsurelyaffectacountry’semploysituationandfiscalsituation.2003-6-22*MacroeconomicpolicyItisveryimportanttostabilifymacroeconomicrunningthataseriesofeconomicpolicytookbythegovernment.Amongthem,themostimportantpolicyarefiscalpolicyandmonetarypolicy.Thefiscalpolicybeconstitutedbythegovernment'staxpolicyandexpenditurepolicyThecontentofmonetarypolicyisthatacountryhowtocontrolandadjustthegrowthrateofmoneysupplyundertheNationalCentralBank'scontrol.Agoodorbadmatchforfiscalpolicyandmonetarypolicywilldirectlyaffectacountry’smacroeconomicrunning.Thereforethemacroeconomicpolicyisalsoamaincontentofmacroeconomics.2003-6-22*1-6:LookingAhead1●Whatdeterminesexpansionsandrecessions?WhyhastheUntiedStateshadsuchalongexpansionsinthe1990s?Whathasbeentheroleofmonetaryandfiscalpolicy?HowwilltheEuroaffectmonetarypolicyinEurope?●Whataretheinteractionsbetweenthestockmarket,theforeignexchangemarket,andeconomicactivity?IstheU.S.stockmarkettoohigh?CanthepoorperformanceofJapaninthe1990sbeattributedtothesharpdeclineintheJapanesestockmarketintheearly1990s?●Whyisinflationsomuchlowerinthe1990sthaninearlierdecades?Whatissobadaboutinflation?Shouldcountriesaimforzeroinflation,asisnowthecaseinJapan?2003-6-22*1-4:LookingAhead2●CouldthecurrentU.S.unemploymentratebetoolow?WhyisunemploymentsohighinEurope?WhyhastheJapaneseunemploymentratebeensolowforsomanyyears?●Whydogrowthratesdiffersomuchacrosscountries,evenoverlongperiodsoftime?WhyhasJapangrownsomuchfasterthantheUnitedStatesandEuropeoverthelast40years?WhatarethefactorsbehindtheAsianmiracle?Whyhasgrowthsloweddownsincethemid-1970sinmostrichcountries??2003-6-22*2003-6-2231Chapter2:TheMajorMacroeconomicVariables2-1:AggregateOutput2-2:TheOtherMajorMacroeconomicVariables2003-6-22322-1:AggregateOutputGDP,ValueAdded,andIncomeNominalandRealGDP2003-6-2233GDP,ValueAdded,andIncomeTherearethreewaysofthinkingaboutaneconomy’sGDP1.GDPisthevalueoftheFinalGoodsandServicesProducedintheEconomyDuringaGivenPeriod.2003-6-2234

Steelcompany

Revenuesfromsales$100Expenses(wages)$80Profit$20

CarcompanyRevenuesfromsales$210Expenses$170wages$70Steelpurchases$100Profit$402003-6-2235GDP,ValueAdded,andIncome2.GDPistheSumofValueAddedintheEconomyDuringaGivenPeriod.2003-6-2236GDP,ValueAdded,andIncome3.GDPistheSumofincomesintheEconomyDuringaGivenPeriod.Someoftherevenuesarecollectedbythegovernmentintheformoftaxedonsales—suchtaxesarecalledindirecttaxes.Someoftherevenuesgotopayworkers—thiscomponentiscalledlaborincome.Therestgoestothefirm—thatcomponentiscalledcapitalincome.

2003-6-2237TheCompositionofU.S.GDPbyTypeofIncome(inpercent)19601998Laborincome66%65%Capitalincome26%27%Indirecttaxes8%8%2003-6-2238SummarizeYoucanthinkaboutaggregateoutput--aboutGDP—inthreedifferentbutequivalentways.Fromtheoutputside:GDPisequaltothefinalgoodsandservicesproducedintheeconomyduringagivenperiodAlsofromtheoutputside:GDPisthesumofvalueaddedintheeconomyduringagivenperiodFromtheincomeside:GDPisthesumofincomesintheeconomyduringagivenperiod2003-6-2239NominalandRealGDPNominalGDPisthesumofthequantitiesoffinalgoodsproducedtimestheircurrentprice.NominalGDPisalsocalleddollarGDPorGDPincurrentdollars

RealGDPisthesumofthequantitiesoffinalgoodsproducedtimesconstant(ratherthancurrent)price.RealGDPisalsocalledGDPintermsofgoods,GDPinconstantdollars,GDPadjustedforinflation,orGDPin1992dollars—iftheyearinwhichrealGDPissetequaltonominalGDPis1992.2003-6-22402-2:TheOtherMajorMacroeconomicVariablesTheUnemploymentRateTheInflationRate2003-6-2241TheUnemploymentRateThedefineoftheunemploymentrateUnemploymentandActivitySocialImplicationsofUnemployment2003-6-2242ThedefineoftheunemploymentrateTheunemploymentrateisdefinedastheratiothenumberofunemployedtothelaborforce:u=U/Lunemploymentrate=unemployed/laborforceThelaborforceisdefinedasthesumofthoseemployandtheseunemployed:L=N+Ulaborforce=employed+unemployed

2003-6-2243Populationover16(勞動力資源）

Laborforce（經(jīng)濟(jì)活動人口）

Notinlaborforce

StudentsHousewifeRetiredSickOtherEmployment（從業(yè)人口）

UnemploymentLaborForceStatus2003-6-2244LaborForceStatusoftheU.S.AdultPopulation,19942003-6-2245RemindMacroeconomistscareaboutunemploymentfortwomainreasons:Theunemploymentratetellsthemsomethingaboutwhetheraneconomyisoperatingaboveorbelowitsnormallevel.Unemploymenthasimportantsocialconsequences.Letuslookateachinturn2003-6-2246UnemploymentandActivityInmostcountries,thereisaclearrelationbetweenthechangeinunemploymentandGDPgrowth.ThisrelationisknownasOkun’sLaw.

Okun’slawshowsthathighoutputgrowthistypicallyassociatedwithadecreaseintheunemploymentrate,andlowoutputgrowthisassociatedwithanincreaseintheunemploymentrate.Thismakessense:Highoutputgrowthleadstohighemploymentgrowth,asfirmshiremoreworkerstoproducemore.Highemploymentgrowthleadstoadecreaseinunemployment.Figure:TherelationunemploymentrateversusGDPgrowth2003-6-2248SocialImplicationsofUnemploymentMacroeconomistsalsocareaboutunemploymentbecauseofitsdirecteffectsonthewelfareoftheunemployed.Unemploymentisassociatedwithfinancialandpsychologicalsuffering.2003-6-2249TheInflationRateThedefineofinflationTheGDPDeflatorTheConsumerPriceIndexInflationandUnemploymentWhyDoEconomistsCareAboutInflation?2003-6-2250ThedefineofinflationInflationisasustainedriseinthegenerallevelofprice,asustainedriseinthepricelevel.Theinflationrateistherateatwhichthepricelevelincreases.TheGDPDeflatorTheConsumerPriceIndex(CPI)2003-6-2253InflationandUnemploymentThereisarelationbetweeninflationandeitheroutputorunemployment,butitisfarfrommechanical—itvariesacrosstimeandcountry.Sometime,thereisanegativerelationbetweentheunemploymentrateandthechangeininflation.Whentheunemploymentrateislow,inflationtendstoincrease.Whentheunemploymentrateishigh,inflationtendstodecrease.ThenegativerelationiscalledthePhillipsrelation,andthecurvethatfitsthesetofpointsbestiscalledPhillipscurve.2003-6-2954Chapter3:TheGoodsMarket3-1:TheCompositionofGDP3-2:TheDemandforGoods3-3:TheDeterminationofEquilibriumOutput3-4:InvestmentEqualsSaving:AnAlternativeWayofThinkingAboutGoods-MarketEquilibrium3-5:IstheGovernmentOmnipotent?Awarning2003-6-2955Figure1:Production,Income,andtheDemandforGoods

ProductionIncomeDemand2003-6-29563-1:TheCompositionofGDP●ThefirstcomponentofGDPisconsumption,(C)●Investment(I)issometimescalledfixedinvestmenttodistinguishitforminventoryinvestment.

?Nonresidentialinvestment

?

Residentialinvestment●Governmentspending,(G)

?

Notincludegovernmenttransfers●Netexports(X-Q)isthedifferencebetweenexports(X)andimports(Q).●Inventoryinvestment(IS)isthedifferencebetweengoodsproducedandgoodssoldinagivenyear.2003-6-2957TheCompositionofU.S.GDP,1998BillionsofDollarsPercentofGDP

GDP(Y)1Consumption(C)2Investment(I)NonresidentialResidential3GovernmentSpending(G)4NetExportsExports(X)Imports(Q)5InventoryInvestment(IS)8509580613089393691488-154958-111261100681511418-211-1312003-6-29583-2:TheDemandforGoodsConsumption(C)Investment(I)Government(G)2003-6-2959TheDemandforGoodsZ≡C+I+G+X-QIfTheEconomyisclosed,thenZ≡C+I+G2003-6-2960Consumption(C)C=C(YD)(+)YDisdisposableincomeC=c0+c1YD(3.1)c1iscalledthemarginalpropensitytoconsumec0isautonomousconsumeYD≡Y-T C=c0+c1(Y-T)(3.2)Figure:ConsumptionandDisposableIncomeInvestment(I)

2003-6-2963Government(G)Gdescribesfiscalpolicy—thechoiceoftaxesandspendingbythegovernment.Governmentdonotbehavewiththesameregularityasconsumersorfirms.SothereisnoreliablerulewecouldwriteforGorTcorrespondingtotherulewewriteforconsumption.Oneofthetasksofmacroeconomistsistoadvisegovernmentsonspendingandtaxdecisions.Thatmeanswedonotwanttolookatamodelinwhichwehavealreadyassumedsomethingabouttheirbehavior.2003-6-29643-3:TheDeterminationofEquilibriumOutputUsingAlgebraUsingaGraphUsingWordsHowLongDoesItTakeforOutputtoAdjust?2003-6-29653-3:TheDeterminationofEquilibriumOutputSolvingamodelmeansnotonlysolvingitalgebraicallybutalsounderstandingwhytheresultsarewhattheyare.

Inthebook,solvingamodelwillalsomeancharacterizingtheresultsusinggraphs—sometimesskippingthealgebra—anddescribingtheresultsandthemechanismsinwords.macroeconomistsalwaysusethreetools:1.Algebratomakesurethatthelogicisright2.Graphstobuildtheintuition3.WordstoexplaintheresultsTheDeterminationofEquilibriumOutputUsingAlgebraUsingaGraph1UsingaGraph22003-6-2970HowLongdoesItTakesforOutputtoAdjustInourexample,alladjustmentisinstantaneous.Butintherealword,thisinstantaneousadjustmentdoesnotseemveryplausible.Andindeeditisnot.Afirmthatfacesanincreaseindemandmaydecidetowaitforbeforeadjustingitsproduction,drawingdownitsinventoriestosatisfydemand.Aconsumerwhogetsaraiseatworkmaynotadjustherconsumptionrightaway.Andthesedelaysimplythattheadjustofoutputwilltaketime.2003-6-29713-4:InvestmentEqualsSaving:AnAlternativeWayofThinkingAboutGoods-MarketEquilibriumS≡YD

–C≡Y-T-CY=C+I+GS=I+G-TY-T-C=I+G-TRearranging,wegetI=S+(T-G)(3.8)

Thetermontheleftisinvestment.Thefirsttermontherightisprivatesaving.Thesecondtermispublicsaving—taxesminusgovernmentspending.

2003-6-2972ChangewaytolookequilibriumEquation(3.8)givesusanotherwayoflookingatequilibriuminthegoodsmarket.Equilibriuminthegoodsmarketrequiresthatinvestmentequalssaving–thesumofprivateandpublicsaving.ThiswayoflookingatequilibriumexplainwhytheequilibriumconditionforthegoodsmarketiscalledtheISrelation,for“InvestmentequalstoSaving.”Whatfirmwanttoinvestmustbeequaltowhatpeopleandthegovernmentwanttosave.2003-6-2973AnAlternativeWayofThinkingAbouttheDeterminationofEquilibriumOutputS=Y-T-C=Y-T-co-c1(Y-T)

Rearranging,wegetS=-co+(1-c1)(Y-T)Replacingprivatesavinginequation(3.8),I=-co+(1-c1)(Y-T)+(T-G)Solvingforoutput,Y=1/(1-c1)[co+I+G-c1T]2003-6-29743-5:IstheGovernmentOmnipotent?AwarningChanginggovernmentspendingortaxesmaybefarfromeasy.Theeffectsofspendingandtaxesondemandaremuchlessmechanicalthanequation(3.7)makesthemappear.Maintainingadesiredlevelofoutputmaycomewithunpleasantsideeffects.Cuttingtaxesorincreasinggovernmentspendingmayleadtolargebudgetdeficits,andanaccumulationofpublicdebt.2003-6-2975Chapter4:FinancialMarket4-1:TheDemandforMoney4-2:TheDeterminationoftheInterestRate:Ⅰ4-3:TheDeterminationoftheInterestRate:Ⅱ2003-6-29764-1:TheDemandforMoneyAssumethatyouthechoicebetweenonlytwofinancialassets:

●Money,whichcanbeusedfortransactions,butpayszerointerest.Inreality,therearetwotypesofmoney:currency,thecoinsandbillsissuedbythecentralbank,andcheckabledeposits,thebankdepositsonwhichyoucanwritechecks.●Bonds,whichcannotbeusedfortransactions,butpayapositiveinterestrate,i.Inrealitytherearemanyotherassetsthanmoney,andinparticularmanytypesofbonds,eachassociatedwithaspecificinterestrate.2003-6-2977Therelationbetweenthedemandformoney,nominalincome,andtheinterestrateMd=$YL(i)(4.1)(-)Md/$Y=L(i)(4.2)Thedemandformoneyincreasesinproportiontonominalincome.Thedemandformoneydependsontheinterestrate.ThisiscapturedbythefunctionL(i)andthenegativesignunderneath:Anincreaseintheinterestratedecreasesthedemandformoney.TheDemandforMoney2003-6-29794-2:TheDeterminationoftheInterestRate:ⅠMoneyDemand,MoneySupply,andtheEquilibriumInterestRateMonetaryPolicyandOpenMarketOperations2003-6-2980TheLMRelationEquilibriuminfinancialmarketrequiresthatmoneysupplybeequaltomoneydemand,thatMs=Md.Usingequation(4.1)formoneydemand,theequilibriumconditionisMoneysupply=MoneydemandM=$YL(I)Thisequationtellsusthattheinterestratemustbesuchthatpeoplearewillingtoholdanamountofmoneyequaltotheexistingmoneysupply.ThisequilibriumrelationiscalledtheLMrelation.ThedeterminationoftheInterestRateTheEffectsNominalIncomeontheInterestRateTheEffectsofanIncreaseintheMoneySupplyontheInterestRate2003-6-2984MonetaryPolicyandOpenMarketOperationsTheinterestrateisdeterminedbytheequalityofthesupplyofmoneyandthedemandformoney.Bychangingthesupplyofmoney,thecentralbankcanaffecttheinterestrate.Thecentralbankchangethesupplyofmoneythoughopenmarketoperations,whicharepurchasesorsalesofbondsformoneyOpenmarketoperationsinwhichthecentralbankincreasesthemoneysupplybybuyingbondsleadtoanincreaseinthepriceofbonds—equivalently,adecreaseintheinterestrate.Openmarketoperationsinwhichthecentralbankdecreasesthemoneysupplybysellingbondsleadtoandecreaseinthepriceofbonds—equivalently,aincreaseintheinterestrate.2003-6-29854-3:TheDeterminationoftheInterestRate:ⅡWhatBanksDoThesupplyandDemandforcentralBankMoneyTheDemandforMoneyTheDemandforReservesTheDeterminationoftheInterestRateTwoAlternativewaysofLookingattheEquilibriumTheSupplyandDemandforReservesTheSupplyandDemandforMoneyOpenMarketOperationsRevisited2003-6-2986ThebalanceSheetofbanks(a)andtheBalancesheetoftheCentralBankRevisited(b)(a)BanksAssetsLiabilitiesReservesLoansBondsCheckabledeposits(b)CentralBankAssetsLiabilitiesBondsCentralBankMoney=Reserves+Currency2003-6-2987TheSupplyandDemandforCentralBankMoneyDemandFormoneyDemandforCheckableDepositsDemandforcurrency

DemandforReserves(bybanks)DemandForCentralBankmoneySupplyOfCentralBankMoney2003-6-2988TheDemandforMoneyMd=$YL(i)(4.4)(-)CUd=cMd(4.5)Dd=(1-c)Md(4.6)Equation(4.5)givesthefirstcomponentofthedemandforcurrencybythepublic.Equation(4.6)givesthedemandforcheckabledeposits.Thisdemandforcheckabledepositsleadstoademandbybanksforreserves,thesecondcomponentofthedemandforcentralbankmoney.2003-6-2989TheDemandforreservesR=θD(4.7)IfpeoplewanttoholdDdindeposits,then,fromequation(4.7)banksmustholdθDdinreserves.Combiningequations(4.6)and(4.7),thesecondcomponentofthedemandforcentralbankmoney—thedemandforreservesbybanks—isgivenby:Rd=θ(1-c)Md(4.8)2003-6-2990TheDeterminationoftheInterestRateTheequilibriumconditionisthatthesupplyofcentralbankmoneybeequaltothedemandforcentralbankmoneyH=CUd+Rd(4.9)ReplaceCUdandRdbytheirexpressionsfromequations(4.50and(4.8)togetH=cMd+θ(1-c)Md=[c+θ(1-c)]MdReplacetheoveralldemandformoney,Md,byitsexpressionsfromequation(4.4)toget:H=[c+θ(1-c)]$YL(i)(4.10)

TheDeterminationoftheInterestRatewhenMoneyIncludesBothCurrencyandCheckableDeposits2003-6-2992TwoAlternativewaysofLookingattheEquilibrium(1)TheSupplyandDemandforReservesTaketheequilibriumcondition(4.9)andmovethedemandforcurrencytotheleftside,toget:H-CUd=RdTheleftsidegivesthesupplyofreversesastheamountofcentralbankmoneyminuswhatpeopleholdascurrency.Therightsidegivesthedemandforreverses.Theequilibriumconditionnowreads:Thesupplyofreservesmustbeequaltothedemandforreserves.2003-6-2993TwoAlternativewagsofLookingattheEquilibrium(2)TheSupplyandDemandforMoneyTakeequation(4.10)anddividebothsidesby[c+θ(1-c)]toget:H/[c+θ(1-c)]=$YL(i)(4.11)Supplyofmoney=DemandformoneyTherightsideoftheequationgivestheoveralldemandformoney(currencypluscheckabledeposits).Theleftsidegivestheoverallsupplyofmoney(currencypluscheckabledeposits).Theequilibriumconditionisthatdemandandsupplybeequal.Chapter5:GoodsandFinancialMarket:TheIS-LMModel5-1:TheGoodsMarketandtheISRelation5-2:FinancialMarketandtheLMRelation5-3:TheIS-LMModel:Exercise5-4:UsingaPolicyMix5-5:AddingDynamics5-6:DoestheIS-LMModelActuallyCaptureWhatHappensintheEconomy?5-1:TheGoodsMarketandtheISRelationSummarizewhatwelearnedinchapter3Investment,Sales,andtheinterestrateTheIScurveShiftsintheISCurveSummarizeSummarizewhatwelearnedinchapter3Wecharacterizedequilibriuminthegoodsmarketastheconditionthatproduction,Y,beequaltothedemandforgoods,Z.WecalledthisconditiontheISrelation,becauseitcanbereinterpretedastheconditionthatinvestmentbeequaltosaving.Summarizewhatwelearnedinchapter3Wedefineddemandasthesumofconsumption,investment,andgovernmentspending.Weassumedthatconsumptionwasafunctionofdisposableincome(incomeminustaxes),andtookinvestmentspending,govern