Potential GDP- the maximum volume of real output that an economy is capable of producing over a given period of time (usually a year) with the full and efficient use of all available factors of production and available technology. From the notebook, this is GDP produced with full efficient use of resources.

Actual GDP– the volume of real output created in the economy over a certain period.

Uk.r.=Ufakt.-U*(market gap in GDP production, GDP losses)

Okun's law (law of the natural rate of unemployment) - if the actual unemployment rate exceeds the natural rate by 1%, the lag of actual GDP from potential is 2-2.5%.

The Okun parameter reflects the sensitivity of GDP to the value of market unemployment.

Ufact.-U*/ U* *100% = -y*(Ufact.-U*)

If employment falls and unemployment rises, output will also fall. Thus, the graph reflects the decreasing dependence of output on the unemployment rate.

12. Inflation: concept and types.

Inflation- in macro: a sustainable process of increasing the general price level.

Inflation- this is the process of depreciation of money, which manifests itself in an increase in prices for goods and services, not due to an increase in their quality. An increase in the price level, inflation, means a decrease in the purchasing power of money.

The causes of inflation are divided into internal and external.

To internal reasons include:

State budget deficit associated with increased government spending;

High level of unproductive government spending, especially military;

Disproportions at the level of micro- and macroeconomics, which are a manifestation of the cyclical nature of economic development;

Mistakes in the government's economic policy and others.

External reasons inflation are:

Structural global crises (raw materials, energy, food, etc.), which are accompanied by multiple increases in prices for raw materials, oil, food, etc. This growth became the reason for a sharp increase in prices for monopolies for their products;

The exchange of national currency by banks for foreign currency causes the need for additional issue of paper money, which overwhelms the channels of monetary circulation and leads to inflation.

Deflation- a sustainable process of reducing the general price level. Disinflation is a decrease in the rate of growth of the price level. Stagflation – stagnation + inflation (a combination of unemployment and inflation).

An inflation shock is a sudden increase in the general price level.

Moderate (creeping) inflation is characterized by an increase in consumer prices of about 10 percent per year.

Galloping inflation is a phenomenon in which there is a serious rise in prices and a decline in the country's economy.

Hyperinflation is an extremely rapid increase in the general level of prices of goods and services.

13. Measuring inflation: indicators of price levels and inflation rates.

A system of indicators reflecting the growth of the price level in the macroeconomy: 1) GDP deflator index2) consumer price index (to estimate the cost of living)

Deflator calculated for a changing set of goods; it shows changes in prices for the entire list of products and services produced in the economy; it takes into account changes in the structure of goods produced; it shows changes in prices for products produced by national factors. In other words: The GDP deflator takes into account the prices of all goods and services produced in a country. The deflator does not take into account the prices of imported goods. The deflator allows for changes in the mix of goods and services in accordance with changes in the composition of GDP.

2)CPI calculated on the basis of the consumer basket - a set of goods and services reflecting the consumption structure of a typical family (from 300 to 600 goods in different countries, in the Russian Federation = 495).

CPI= sum p1*q0: sum p0*q0

The composition of the basket is determined by experts and has been used to measure the CPI for many years.

CPI= cost of the consumption basket in prices of the current year: cost of the consumption basket in prices of the base year

3)𝝅 - inflation rate - rate of increase in the price level (rate of increase in the price level)

𝝅=CPI1-CPI0/CPI0 *100%

Over the past two decades, the Central Banks of many countries have been pursuing an inflation targeting policy - setting inflation targets. 𝝅for developed countries=2% per year, 𝝅2017/2018=4% per year

4) Nominal income is understood as the actual income received by an economic agent in the form of wages, profits, interest, rent, etc. Real income is determined by the number of goods and services that can be purchased with the amount of nominal income. Thus, to obtain the value of real income, it is necessary to divide nominal income by the price index:

Real Income = Nominal Income / Consumer Price Index

One of the most important patterns in the functioning of a capitalist market economy is macroeconomic instability, manifested in periodic fluctuations in total production, employment (unemployment) and the price level. Unemployment and inflation, being among the most important macroeconomic problems, are the most striking manifestations of macroeconomic instability. At the same time, both unemployment and inflation have a strong impact on the socio-economic development of society as a whole, being the object not only of close attention of academic economists, but also of state macroeconomic policy.

Economic cycles. Potential and actual GDP. Causes of economic fluctuations. Phases of the cycle.

Theories of cyclical development.

Unemployment and its forms. Measuring unemployment.

Natural rate of unemployment. Okun's Law.

Inflation and its measurement. Inflation rate.

Demand inflation and cost inflation.

Inflation and real income. The impact of inflation on the redistribution of income and wealth. The influence of inflation on the volume of national production.

Stabilization policy and its methods.

1. Economic cycles. Potential and actual GDP. Causes of economic fluctuations.

Economic cycles. Potential and actual GDP.

Economic cycle represents periodically recurring and successive ups and downs of economic activity against the background of the general trend of economic growth.

Figure 4.1 shows a possible picture of the cycle. We plot years on the abscissa axis. On the ordinate axis – volume GDP as the most general indicator of economic activity. The straight line depicts the trend of economic growth (trend), that is, it represents the dynamics of volume potential GDP in time. The wavy line depicts the actual cyclical development of the economy, that is, it represents the time dynamics of the volume actual GDP (in nominal terms).

Potential GDP - the maximum volume of real output that an economy is capable of producing over a given period of time (usually a year) with the full and efficient use of all available factors of production and available technology.

Potential GDP, therefore, determines the production potential of the economy and depends on the volume of the total labor force and labor productivity. (More about this in the topic “Economic Growth”).

Actual GDP – the volume of real output created in the economy over a certain period.

Level actual GDP determined by the interaction of aggregate demand and potential GDP . If the level of aggregate demand is less than potential GDP, then the level of actual GDP will be below potential GDP, since it will be equal to the level of aggregate demand. When aggregate demand increases, actual GDP can reach the level of potential GDP, but by definition cannot be higher than it (Figure 4.1A).

GDP actual potential GDP

GDP (nominal)

GDP

potential GDP

actual GDP

In Figure 4.1 the actual GDP presented in nominal terms: upward deviations of the wavy line from the trend indicate inflation.

Causes of economic fluctuations.

The economic cycle first manifested itself in England, where in 1825 the first crisis of overproduction was noted (as the economic cycle was then called). recession or recession). Since then, this phenomenon has been repeated periodically every 7-12 years. Since 1857, the cycle has become global in nature, since this year the economic downturn (recession) hit all the most developed countries. The deepest recession in capitalist countries took place in 1929-1933 and went down in history as « Great Depression » : the decline in production reached 40% in some countries.

The scientific theory of cyclical development was developed by K. Marx in “Capital” on the basis of the labor theory of value. The classics and neoclassics did not recognize the natural nature of cyclical development. They believed (many of their followers still believe) that recessions are caused by exogenous (that is, external to the economy) factors: wars, revolutions, but mainly by incorrect monetary policy of the state.

Since the time of Keynes, the view has been established that cause economic downturns are rooted in insufficient aggregate in demand. Respectively cause of macroeconomic fluctuations(that is, the existence of a cycle), according to most modern economists, are fluctuations in aggregate demand, especially investment demand.

Potential GDP is the internal product of the state, which can be provided to the maximum extent with full use of available resources.

This state is called. There is another concept - real GDP, for the formation of which producers create and sell the required amount of products over a certain time at different price levels. When analyzing, it is customary to distinguish long-term and short-term periods. Thus, subjects in the long term can be described by a classical model. A free market without government intervention automatically ensures the use of resources in production, which leads to the achievement of potential GDP.

The size of potential GDP is determined depending on the size of available technologies and resources, but may not depend on That is why the long-term aggregate supply curve is vertical.

Potential GDP obeys the law of neutrality of money. Thus, the vertical direction of the curve indicates the degree to which output at the level of such GDP is supported by the forces of the market and competition in the long term. At the same time, the price level can have different values ​​and depend on the volume of funds in the economy. And the other side of this economic law is that in the presence of high prices, high prices are traced, and in long-term planning it affects both prices and

As the amount of resources in the economy increases, the development of technical progress can be traced and, accordingly, potential GDP increases, and its curve on the graph should shift to the right. But with a reduction in resources or technical regression, everything should happen the other way around.

A significant number of economists believe that GDP (actual and potential) can reflect the long-term period in macroeconomics. At the same time, deviations of the first type of internal product from the second are quite successfully eliminated by the market.

However, modern economists have concluded that there is a short period (an example is a quarter) in which the classical approach to the neutrality of money cannot work. In other words, any changes in the money supply have a significant impact on both the price level and potential GDP. Thanks to this statement, a new concept has emerged - short-term GDP, to reflect the dynamics of which the aggregate supply curve is no longer vertical, but rather horizontal.

Such a curve reflects the possibility of increasing the ability of business entities to produce products at a certain price level. This fact is confirmed by the presence of noticeable gaps between actual GDP and its potential level. In other words, the domestic economy is not operating at full capacity.

Potential GDP is the gross domestic product, but calculated under the condition of full employment of the population. It is worth noting here that when calculating this indicator, economists take into account such factor as the natural rate of unemployment, what it would be at full employment. It is unlikely that the economy of even one country is capable of creating conditions under which there would be enough jobs for everyone who wants to work and who can do it. Several social aspects also influence the unemployment rate.

Full employment is a state of the economy in which there is no cyclical unemployment, and fractional and structural unemployment add up to the total unemployment rate.

Calculation of potential GDP

To do this you need to take into account the unemployment rate. For the first time, this value was mathematically substantiated by one American economist, Arthur Okun. Based on his calculations, he formulated a law according to which, if the real unemployment rate is 1% higher than the natural rate, then the gap in GDP will be 2.5%. Given law was accepted into economics, and the coefficient Okena equals 2.5.

It is worth noting that when calculating potential GDP, the price index is not taken into account, but all types of unemployment (cyclical, frictional and structural) are taken into account.

In economic literature, potential GDP is usually denoted by the letter Y with an asterisk * or an apostrophe ‘.

So, Y*=Y/1-k * (u-u*)

Y – real GDP,

k – Okun coefficient,

u is the real unemployment rate,

u* - natural unemployment rate,

(u-u*) – level of cyclical unemployment.

Application of potential GDP value

As for the application of this indicator, in fact, potential is what the economy should strive for in the future, and in the long term it is this indicator that determines the level of production. In addition, since this value takes into account:

• the volume of existing labor, material and natural resources;
• efficiency in the use of resources, which is determined by progress and education.

Based on this, the long-term perspective should include:

• regulating population growth and creating the necessary conditions for it;
• capital increase;
• development and application of innovative technologies.

Thus, it is clear that such economic indicators are used to determine the general plan for the further development of various industries.

Aggregate supply is the total volume of production of technical and equipment produced in the economy at each possible price level. AS shows how much output is offered to consumers at different price levels in the economy.

The aggregate supply curve can be divided into three segments:

1.horizontal (Keynesian)

2.intermediate (ascending)

3.vertical (classic).

The horizontal, or Keynesian, segment is characterized by the fact that all factors of production are not fully used. During this period, the real production volume has not reached its potential level and there are reserves of capacity, labor, and raw material reserves. In this segment, production growth occurs at the expense of unused resources and is not accompanied by rising prices (an unemployed person who gets a job agrees to the existing wage conditions, and the owner of inventory is happy to sell them at existing prices).

Increased demand will influence production growth. This situation can persist until a certain level of GDP (Y1), after which the state of the economy will begin to change.

The intermediate, or ascending, segment of the aggregate supply curve corresponds to the gradual involvement in production of free factors that have certain boundaries. Their further involvement in production ultimately results in an increase in costs, which affects the cost of products. There is a general gradual increase in prices for goods and services, and production is not growing as quickly as before.

In the vertical, or classic, sector, production has reached its potential level (Y2), when all resources are used and full employment is achieved. In such conditions, it is impossible to achieve a further increase in production volume in a short period of time, even if this is prompted by an increase in aggregate demand.

Consequently, a change in aggregate demand can only affect the price level, but does not affect the volume of aggregate production and employment. The amount of aggregate supply is also influenced by various factors:

1.change in prices for resources. Their increase leads to an increase in production costs and, as a result, to a decrease in aggregate supply;

2.growth in labor productivity leads to an increase in production volume and, accordingly, to an expansion of aggregate supply;

3.changes in business conditions (taxes, subsidies). When taxes increase, costs increase and aggregate supply decreases.