Short assignments 4

Batayanm

ECON2011.pdf

Home >Business & Finance homework help >Management homework help >Short assignments 4

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What kinds of questions does economics

address?

• What are the principles of how people make

decisions?

• What are the principles of how people interact?

• What are the principles of how the economy as

a whole works?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What Economics Is All About

▪ Scarcity: the limited nature of society’s resources ▪ الطبيعة المحدودة لموارد المجتمع: الندرة

▪ Economics: the study of how society manages its scarce resources, e.g.

▪ how people decide what to buy,

how much to work, save, and spend

▪ how firms decide how much to produce,

how many workers to hire

▪ how society decides how to divide its resources between national

defense, consumer goods, protecting the environment, and other needs

▪ النادرة ، على سبيل المثال ،للموارده دراسة كيفية إدارة المجتمع : االقتصاد

▪ واإلنفاقواالدخار، العمل ، وكم مدة كيف يقرر الناس ما يشترونه ،

▪ للتوظيفالعمال كمية االنتاج، وكم عدد تقرر الشركات كيف

▪ كيف يقرر المجتمع كيفية تقسيم موارده بين الدفاع الوطني والسلع االستهالكية وحماية البيئة وغيرها من االحتياجات

The principles of

HOW PEOPLE

MAKE DECISIONS

مبادئ كيف يتخذ الناس القرارات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #1: People Face Tradeoffs المبادالت التجاريهالناس يواجه

All decisions involve tradeoffs. Examples:

▪ Going to a party the night before your midterm leaves less time for studying.

▪ Having more money to buy stuff requires working longer hours, which

leaves less time

for leisure.

▪ Protecting the environment requires resources

that could otherwise be used to produce

consumer goods.

▪ :أمثلة. جميع القرارات تنطوي على المبادالت

▪ .الذهاب إلى حفلة في الليلة التي تسبق فترة منتصف مدة دراستك

▪ .يتطلب الحصول على المزيد من المال لشراء المواد ساعات أطول ، مما يترك وقتًا أقل لقضاء وقت الفراغ

▪ .تتطلب حماية البيئة موارد يمكن استخدامها إلنتاج سلع استهالكية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #1:

People Face Tradeoffs ▪ Society faces an important tradeoff: ▪ مبادله تجاريه مهمةالمجتمع يواجه

efficiency vs. equality

▪ Efficiency: when society gets the most from its scarce resources

▪ Equality: when prosperity is distributed uniformly among society’s members

▪ Tradeoff: To achieve greater equality,

could redistribute income from wealthy to poor.

But this reduces incentive to work and produce, shrinks the size of the

economic “pie.”

▪ عندما يستفيد المجتمع أكثر من موارده الشحيحة: الكفاءة

▪ عندما يتم توزيع الرخاء بشكل موحد بين أعضاء المجتمع: المساواة

▪ لكن هذا يقلل من الحافز . لتحقيق قدر أكبر من المساواة ، يمكن إعادة توزيع الدخل من األثرياء إلى الفقراء: المقايضة .االقتصادية" الكعكة"للعمل واإلنتاج ، ويقلص حجم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #2: The Cost of Something Is What You Give Up to Get It تكلفة شيء ما ما يمكنك التخلي عنه

▪ Making decisions requires comparing the costs and benefits of

alternative choices.

▪ The opportunity cost of any item is whatever must be given upمهم

to obtain it.

▪ It is the relevant cost for decision making.

▪ .يتطلب اتخاذ القرارات مقارنة تكاليف وفوائد الخيارات البديلة

▪ .للحصول عليهالتخلي عنه عليه تكلفة الفرصة البديلة ألي عنصر هي ما يجب

▪ إنها التكلفة ذات الصلة التخاذ القرار

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #2:

The Cost of Something Is What You Give Up to Get It

Examples: The opportunity cost of…

…going to college for a year is not just the tuition, books, and fees, but also the foregone wages.

…seeing a movie is not just the price of the ticket,

but the value of the time you spend in the theater.

...تكلفة الفرصة البديلة

الذهاب إلى الكلية لمدة عام ليس فقط الرسوم الدراسية ، والكتب ، والرسوم ، ولكن أيضا األجور ... .الضائعة

رؤية فيلم ليس مجرد سعر التذكرة ، بل قيمة الوقت الذي تقضيه في المسرح...

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #3: Rational People Think at the Margin

العقالء يفكرون في الهامش Rational people

▪ systematically and purposefully do the best they can to

achieve their objectives.

▪ make decisions by evaluating costs and benefits of

marginal changes, incremental adjustments to an

existing plan.

▪ شخاص عقالنيين

▪ .بشكل منهجي وعادل القيام بأفضل ما في وسعهم لتحقيق أهدافهم

▪ اتخاذ القرارات من خالل تقييم تكاليف وفوائد التغييرات الهامشية ، والتعديالت .اإلضافية لخطة موجودة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #3:

Rational People Think at the Margin Examples:

▪ When a student considers whether to go to college for an additional

year, he compares the fees & foregone wages to the extra income

he could earn with the extra year of education.

▪ When a manager considers whether to increase output, she

compares the cost of the needed labor and materials to the extra revenue.

▪ :أمثلة

▪ عندما يدرس الطالب ما إذا كان سيذهب إلى الكلية لمدة عام إضافي ، فإنه يقارن الرسوم واألجور .الضائعة بالدخل اإلضافي الذي يمكن أن يكسبه مع السنة اإلضافية للتعليم

▪ عندما يدرس المدير ما إذا كان سيتم زيادة اإلنتاج ، فإنها تقارن تكلفة العمالة والمواد المطلوبة .باإليرادات اإلضافية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #4: People Respond to Incentives الناس يستجيبون للحوافز ▪ Incentive: something that induces a person to act, i.e.

the prospect of a reward or punishment. ▪ العقوبةشيء يحرض الشخص على التصرف ، أي احتمال المكافأة أو : الحافز

▪ Rational people respond to incentives.

Examples:

▪ When gas prices rise, consumers buy more hybrid cars and fewer gas guzzling

SUVs.

▪ When cigarette taxes increase,

teen smoking falls.

▪ .يستجيب العقالنيون للحوافز

▪ :أمثلة

▪ عندما ترتفع أسعار الغاز ، يشتري المستهلكون المزيد من السيارات الهجينة وعدد أقل من سيارات الدفع الرباعي .التي تستهلك كميات كبيرة من الغاز

▪ .عندما تزيد الضرائب على السجائر ، ينخفض التدخين في سن المراهقة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Applying the principles You are selling your 1996 Mustang. You have already spent $1000 on repairs.

At the last minute, the transmission dies. You can pay $600 to have it repaired, or sell the

car “as is.”

In each of the following scenarios, should you have the transmission repaired? Explain.

.دوالر على اإلصالحات 1000لقد أنفقت بالفعل . 1996الخاص بك عام بعت موستانج انت

".كما هي"دوالر إلصالحها ، أو بيع السيارة 600يمكنك دفع . يتعطل اإلرسالفي الدقيقة األخيرة ،

.اشرحفي كل من السيناريوهات التالية ، هل يجب أن يتم إصالح ناقل الحركة؟

A. Blue book value (what you could get for the car) is $6500 if transmission works,

$5700 if it doesn’t B. Blue book value is $6000 if transmission works,

$5500 if it doesn’t دوالر إذا لم 5700يعمل ، الناقل دوالر إذا كان 6500هي ( ما يمكن أن تحصل عليه للسيارة)القيمة الدفترية الزرقاء . أ

يكن كذلك دوالر أمريكي إذا لم يكن كذلك 5500دوالر إذا كان اإلرسال يعمل ، 6000قيمة الكتاب األزرق هي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers Cost of fixing transmission = $600

A. Blue book value is $6500 if transmission works,

$5700 if it doesn’t Benefit of fixing the transmission = $800

($6500 – 5700).

It’s worthwhile to have the transmission fixed.

دوالر 600= الناقل تكلفة تثبيت

يكن يعملدوالر إذا لم 5700دوالر إذا كان يعمل اإلرسال ، 6500هي قاليمة الدفترية الزرقاء

(.دوالر 5700 - 6500)دوالر 800= فائدة ثبات الناقل

.من الجدير بنا أن يكون النقل ثابتًا

B. Blue book value is $6000 if transmission works,

$5500 if it doesn’t Benefit of fixing the transmission is only $500.

Paying $600 to fix transmission is not worthwhile. يكن يعملدوالر إذا لم 5500يعمل ، الناقل دوالر إذا كان 6000القيمة الدفترية الزرقاء هي

.دوالر فقط 500تبلغ فائدة إصالح اإلرسال

جديرة باالهتمامالناقل ليست دوالر إلصالح 600دفع

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Observations

▪ The $1000 you previously spent on repairs is irrelevant.

What matters is the cost and benefit

of the marginal repair (the transmission).

▪ The change in incentives from scenario A

to scenario B caused your decision to change.

▪ . دوالر الذي أنفقته سابقًا على اإلصالحات غير ذي صلة 1000مبلغ (.اإلرسال)اإلصالح الهامشي ما يهم هو التكلفة واالستفادة من

▪ تسبب التغيير في الحوافز من السيناريو أ إلى السيناريو ب في تغيير قرارك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The principles of

HOW PEOPLE

INTERACT

مبادئ كيف تتفاعل الناس

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #5: Trade Can Make Everyone Better Off

التجارة يمكن أن تجعل الجميع أفضل حاال ▪ Rather than being self-sufficient,

people can specialize in producing one good or service

and exchange it for other goods. ▪ وبدالً من االكتفاء الذاتي ، يمكن للناس أن يتخصصوا في إنتاج سلعة أو خدمة واحدة ويتبادلونها

.من أجل سلع أخرى ▪

▪ Countries also benefit from trade and specialization:

▪ Get a better price abroad for goods they produce

▪ Buy other goods more cheaply from abroad than could be produced at

home

▪ :تستفيد البلدان أيًضا من التجارة والتخصص

▪ الحصول على سعر أفضل في الخارج للبضائع التي تنتجها

▪ شراء السلع األخرى بسعر أرخص من الخارج مما يمكن إنتاجه في المنزل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #6: Markets Are Usually A Good Way to Organize Economic Activity األسواق عادة ما تكون وسيلة جيدة لتنظيم النشاط االقتصادي ▪ Market: a group of buyers and sellers (need not be in a

single location) ▪ (ال يجب أن يكونوا في مكان واحد)مجموعة من المشترين والبائعين : السوق

▪ “Organize economic activity” means determining

▪ what goods to produce

▪ how to produce them

▪ how much of each to produce

▪ who gets them

▪ يعني تحديد"تنظيم النشاط االقتصادي

▪ ما هي السلع التي ننتجها

▪ كيفية إنتاجها

▪ كم عدد كل واحد النتاجه

▪ من يحصل عليهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #6: Markets Are Usually A Good Way to Organize Economic Activity

▪ A market economy allocates resources through the decentralized

decisions of many households and firms as they interact in markets. ▪ يخصص اقتصاد السوق الموارد من خالل القرارات الالمركزية للعديد من األسر والشركات عندما تتفاعل

األسواقفي

▪ Famous insight by Adam Smith in The Wealth of Nations (1776):

Each of these households and firms acts as if “led by an

invisible hand” to promote general economic well-being.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #6: Markets Are Usually A Good Way to Organize

Economic Activity

▪ The invisible hand works through the price system:

▪ The interaction of buyers and sellers

determines prices.

▪ Each price reflects the good’s value to buyers and the cost of producing the good.

▪ Prices guide self-interested households and firms to make decisions

that, in many cases, maximize society’s economic well-being.

▪ :تعمل اليد الخفية من خالل نظام األسعار

▪ تفاعل البائعين والمشترين يحدد األسعار

▪ .يعكس كل سعر قيمة السلعة بالنسبة للمشترين وتكلفة إنتاج السلعة

▪ وتوجه األسعار باألسر والشركات المهتمة ذاتيا التخاذ قرارات تزيد في كثير من الحاالت من رفاه .المجتمع االقتصادي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #7: Governments Can Sometimes Improve Market Outcomes يمكن للحكومات في بعض األحيان تحسين نتائج السوق

▪ Important role for govt: enforce property rights

(with police, courts)

▪ People are less inclined to work, produce, invest, or purchase if large risk of their property being stolen.

▪ (مع الشرطة والمحاكم)إنفاذ حقوق الملكية : دور هام للحكومة

▪ الناس أقل ميالً إلى العمل أو اإلنتاج أو االستثمار أو الشراء إذا كان هناك خطر كبير من سرقة .ممتلكاتهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #7: Governments Can Sometimes Improve Market

Outcomes مهم

▪ Market failure: when the market fails to allocate society’s resources efficiently

▪ بكفاءةعندما يفشل السوق في تخصيص موارد المجتمع : فشل السوق

▪ Causes of market failure:

▪ Externalities, when the production or consumption

of a good affects bystanders (e.g. pollution)

▪ Market power, a single buyer or seller has substantial influence on

market price

(e.g. monopoly)

▪ :أسباب فشل السوق

▪ (مثل التلوث)العوامل الخارجية ، عندما يؤثر إنتاج أو استهالك السلعة على المارة

▪ (على سبيل المثال االحتكار)أو البائع الواحد له تأثير كبير على سعر السوق المشتري قوة السوق ،

▪ Public policy may promote efficiency. .السياسة العامة قد تعزز الكفاءة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #7:

Governments Can Sometimes Improve Market Outcomes

▪ Govt may alter market outcome to promote equity. ▪ قد تغير الحكومة من نتائج السوق لتعزيز العدالة

▪ If the market’s distribution of economic well-being is not desirable, tax

or welfare policies can change how the economic “pie” is divided.

▪ إذا لم يكن توزيع السوق للرفاه االقتصادي مرغوبا فيه ، فإن السياسات الضريبية أو االجتماعية االقتصادية" الكعكة"يمكن أن تغير كيفية تقسيم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Discussion Question

In each of the following situations, what is the

government’s role? Does the government’s intervention improve the outcome?

a. Public schools for K-12

b. Workplace safety regulations

c. Public highways

d. Patent laws, which allow drug companies to

charge high prices for life-saving drugs

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The principles of

HOW THE

ECONOMY

AS A WHOLE

WORKS

مبادئ االقتصاد كأعمال كاملة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #8: A Country’s Standard of Living Depends on Its Ability to Produce Goods & Services يعتمد مستوى المعيشة للبلد على قدرته على إنتاج السلع والخدمات

▪ Huge variation in living standards across countries and

over time: ▪ :اختالف كبير في مستويات المعيشة عبر البلدان وعبر الزمن

▪ Average income in rich countries is more than ten times average

income in poor countries.

▪ The U.S. standard of living today is about eight times larger than 100 years ago.

▪ .متوسط الدخل في البلدان الغنية هو أكثر من عشرة أضعاف متوسط الدخل في البلدان الفقيرة

▪ .عام 100يبلغ مستوى المعيشة في الواليات المتحدة اليوم ثمانية أضعاف ما كان عليه قبل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #8: A Country’s Standard of Living Depends on Its Ability to Produce Goods & Services

▪ The most important determinant of living standards: productivity,

the amount of goods and services produced per unit of labor. ▪ اإلنتاجية ، وكمية السلع والخدمات المنتجة لكل وحدة من : أهم العوامل المحددة لمستويات المعيشة

.العمالة

▪ Productivity depends on the equipment, skills, and technology

available to workers.

▪ .تعتمد اإلنتاجية على المعدات والمهارات والتكنولوجيا المتاحة للعمال

▪ Other factors (e.g., labor unions, competition from abroad) have far

less impact on living standards.

▪ لها تأثير أقل بكثير على مستويات ( مثل النقابات العمالية ، المنافسة من الخارج)هناك عوامل أخرى المعيشة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #9:

Prices Rise When the Government Prints Too Much Money

ترتفع األسعار عندما تطبع الحكومة الكثير من المال

▪ Inflation: increases in the general level of prices.

▪ .الزيادات في المستوى العام لألسعار: التضخم

▪ In the long run, inflation is almost always caused by excessive growth in the quantity of money, which causes the value of money to fall.

▪ على المدى الطويل ، غالباً ما يحدث التضخم بسبب النمو المفرط في كمية المال ، مما يؤدي إلى .انخفاض قيمة المال

▪ The faster the govt creates money, the greater the inflation rate.

▪ .كلما زادت الحكومة من توليد المال ، زاد معدل التضخم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PRINCIPLE #10: Society Faces a Short-run Tradeoff Between Inflation and Unemployment المجتمع يواجه صفقة قصيرة المدى بين التضخم والبطالة

▪ In the short-run (1–2 years),

many economic policies push inflation and unemployment

in opposite directions. ▪ ، تدفع العديد من السياسات االقتصادية التضخم والبطالة في اتجاهين ( سنة 2-1)في المدى القصير

.متعاكسين ▪

▪ Other factors can make this tradeoff more or less

favorable, but the tradeoff is always present.

▪ أو أقل مواتية ، لكن المقايضة موجودة المبادله التجاريه أكثر عوامل أخرى يمكن أن تجعل هذه .دائماً

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: How to Read Your Textbook

1. Read before class.

You’ll get more out of class.

2. Summarize, don’t highlight.

Highlighting is a passive activity that won’t improve your comprehension or retention.

Instead, summarize each section in your own

words. Then, compare your summary to the one

at the end of the chapter.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: How to Read Your Textbook

3. Test yourself. Try the “Quick Quiz” that follows each section before moving on to the next section. Write your answers down, compare them to the answers in the back of the book. If your answers are incorrect, review the section before moving on.

4. Practice, practice, practice. Work through the end-of-chapter review questions and problems. They are often good practice for the exams. And the more you use your new knowledge, the more solid it will become.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: How to Read Your Textbook

5. Go online. The book comes with excellent web resources, including practice quizzes, tools to strengthen your graphing skills, helpful video clips, and other resources to help you learn the textbook material more easily and effectively. Visit: http://academic.cengage.com/economics/mankiw

6. Study in groups. Get together with a few classmates to review each chapter, quiz each other, and help each other understand the material.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: How to Read Your Textbook

7. Teach someone. The best way to learn something is to teach it to someone else, such as a study partner or friend.

8. Don’t skip the real world examples. Read the Case Studies and “In The News” boxes in each chapter. They will help you see how the new terms, concepts, models, and graphs apply to the real world. As you read the newspaper or watch the evening news, see if you can find the connections with what you’re learning in the textbook.

http://academic.cengage.com/economics/mankiw

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

The principles of decision making are:

• People face tradeoffs.

• The cost of any action is measured in terms of foregone

opportunities.

• Rational people make decisions by comparing marginal costs and marginal benefits.

• People respond to incentives.

• :مبادئ صنع القرار هي

• .المبادالت التجاريهالناس يواجه

• .يتم قياس تكلفة أي إجراء من حيث الفرص الضائعة

• .العقالنيون يتخذون القرارات من خالل مقارنة التكاليف الهامشية والفوائد الهامشية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

The principles of interactions among people are:

• Trade can be mutually beneficial.

• Markets are usually a good way of coordinating trade.

• Govt can potentially improve market outcomes if there is a market

failure or if the market outcome is inequitable.

• :مبادئ التفاعل بين الناس هي

• .يمكن أن تكون التجارة مفيدة للطرفين

• .األسواق هي عادة طريقة جيدة لتنسيق التجارة

• يمكن للحكومة أن تحّسن نتائج السوق إذا كان هناك فشل في السوق أو إذا كانت نتيجة السوق غير منصفة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

The principles of the economy as a whole are:

• Productivity is the ultimate source of living standards.

• Money growth is the ultimate source of inflation.

• Society faces a short-run tradeoff between inflation and

unemployment.

• :مبادئ االقتصاد ككل هي

• .اإلنتاجية هي المصدر النهائي لمستويات المعيشة

• .نمو المال هو المصدر النهائي للتضخم

• .المجتمع يواجه مقايضة قصيرة المدى بين التضخم والبطالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are economists’ two roles? How do they differ?

• What are models? How do economists use them?

• What are the elements of the Circular-Flow Diagram?

What concepts does the diagram illustrate?

• How is the Production Possibilities Frontier related

to opportunity cost? What other concepts does it

illustrate?

• What is the difference between microeconomics and

macroeconomics? Between positive and normative?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Economist as Scientist كعالمالخبير االقتصادي

▪ Economists play two roles:

1. Scientists: try to explain the world

2. Policy advisors: try to improve it

▪ In the first, economists employ the scientific method,

the dispassionate development and testing of theories about how the world works.

▪ :يلعب االقتصاديون دورين

▪ حاول أن تشرح العالم: العلماء. 1

▪ حاول تحسينه: مستشارو السياسة. 2

▪ في المقام األول ، يستخدم االقتصاديون المنهج العلمي ، وتنمية واختبار النظريات حول كيفية عمل العالم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Assumptions & Models االفتراضات والنماذج

▪ Assumptions simplify the complex world,

make it easier to understand.

▪ Example: To study international trade,

assume two countries and two goods.

Unrealistic, but simple to learn and

gives useful insights about the real world.

.االفتراضات تبسط العالم المعقد ، وتسهل فهمه

.لدراسة التجارة الدولية ، افترض دولتين وسلعتين: مثال

غير واقعية ، ولكنها بسيطة للتعلم وتعطي رؤى مفيدة حول العالم الحقيقي

▪ Model: a highly simplified representation of a more complicated reality.

Economists use models to study economic issues.

▪ .يستخدم االقتصاديون نماذج لدراسة القضايا االقتصادية. تمثيل مبسط للغاية لواقع أكثر تعقيًدا: النموذج

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

النماذج المألوفةبعض

A road map

خارطة الطريق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

A model of human

anatomy from high

school biology class نموذج من التشريح البشري من فئة البيولوجيا في المدرسة الثانوية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

A model airplane

نموذج الطائره

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

The model teeth at the

dentist’s office

نموذج األسنان في مكتب طبيب األسنان

Don’t forget to floss!

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Our First Model:

The Circular-Flow Diagram مخطط التدفق الدائري: نموذجنا األول

▪ The Circular-Flow Diagram: a visual model of the economy,

shows how dollars flow through markets among households and firms

▪ نموذج مرئي لالقتصاد ، يبين كيف تتدفق الدوالرات عبر األسواق بين األسر : الدائريالتدفق مخطط والشركات

▪ Two types of “actors”: نوعان من الجهات الفاعله ▪ Households األسر ▪ firms الشركات

▪ Two markets: اثنين من األسواق:

▪ the market for goods and services سوق السلع والخدمات

▪ the market for “factors of production” سوق عموال اإلنتاج

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Factors of Production عوامل اإلنتاج

▪ Factors of production: the resources the economy

uses to produce goods & services, including

▪ labor

▪ land

▪ capital (buildings & machines used in production)

▪ الموارد التي يستخدمها االقتصاد إلنتاج السلع والخدمات ، : عوامل اإلنتاج بما في ذلك

▪ العمال ▪ األرض

▪ (المباني واآلالت المستخدمة في اإلنتاج)رأس المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FIGURE 1: The Circular-Flow Diagram

Households:

▪ Own the factors of production, sell/rent them to firms for income

▪ Buy and consume goods & services

▪ :األسر

▪ إيجارها للشركات للدخل/ بيعها تملك عوامل اإلنتاج ،

▪ واستهالك السلع والخدماتشراء

Households Firms

Firms:

▪ Buy/hire factors of production, use them to produce goods and services

▪ Sell goods & services

▪ :شركات

▪ استئجار عوامل اإلنتاج ، واستخدامها إلنتاج السلع / شراء والخدمات

▪ بيع السلع والخدمات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FIGURE 1: The Circular-Flow Diagram

Markets for Factors of Production

Households Firms

Income Wages, rent, profit

Factors of production

Labor, land, capital

Spending

G & S bought

G & S sold

Revenue Markets for Goods & Services

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Our Second Model:

The Production Possibilities Frontier حدود إمكانيات اإلنتاج

▪ The Production Possibilities Frontier (PPF):

a graph that shows the combinations of two goods the economy can

possibly produce given the available resources and the available technology

▪ رسم بياني يوضح توليفات سلعتين يمكن لالقتصاد أن ينتجهما في ضوء الموارد : حدود إمكانيات اإلنتاج المتاحة والتكنولوجيا المتاحة

▪

▪ Example:

▪ Two goods: computers and wheat

▪ One resource: labor (measured in hours)

▪ Economy has 50,000 labor hours per month available for

production. ▪ :مثال

▪ أجهزة الكمبيوتر والقمح: سلعتان

▪ (يقاس بالساعات)العمل : مورد واحد

▪ ساعة عمل شهريا المتاحة لإلنتاج 50،000االقتصاد لديها

PPF Example ▪ Producing one computer requires 100 hours labor.

▪ Producing one ton of wheat requires 10 hours labor.

5,000 0

4,000 100

2,500 250

1,000 400

50,000 0

40,000 10,000

25,000 25,000

10,000 40,000

0 500 0 50,000

Wheat Computers Wheat Computers

Production Employment of

labor hours

Point

on graph

Production

Com-

puters Wheat

A 500 0

B 400 1,000

C 250 2,500

D 100 4,000

E 0 5,000 A

PPF Example

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Points off the PPF

A. On the graph, find the point that represents

(100 computers, 3000 tons of wheat), label it F.

Would it be possible for the economy to produce

this combination of the two goods?

Why or why not?

B. Next, find the point that represents

(300 computers, 3500 tons of wheat), label it G.

Would it be possible for the economy to produce

this combination of the two goods?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

▪ Point F:

100 computers,

3000 tons wheat

▪ Point F requires

40,000 hours

of labor.

Possible but

not efficient:

could get more

of either good

w/o sacrificing

any of the other.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

▪ Point G:

300 computers,

3500 tons wheat

▪ Point G requires

65,000 hours

of labor.

Not possible

because

economy

only has

50,000 hours.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF: What We Know So Far

Points on the PPF (like A – E)

▪ possible

▪ efficient: all resources are fully utilized

Points under the PPF (like F)

▪ possible

▪ not efficient: some resources underutilized

(e.g., workers unemployed, factories idle)

Points above the PPF (like G)

▪ not possible

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF and Opportunity Cost

▪ Recall: The opportunity cost of an item is what must be given up

to obtain that item. ▪ .ذلك العنصرعلى التخلي عنه للحصول يجب ألحد العناصر هي ما تكلفة الفرصة البديلة : تذكير

▪ Moving along a PPF involves shifting resources (e.g., labor) from the

production of one good to the other.

▪ من إنتاج ( على سبيل المثال ، العمالة)التحرك على طول بي بي اف ينطوي على نقل الموارد .واحد جيد إلى اآلخر

▪ Society faces a tradeoff: Getting more of one good requires

sacrificing some of the other.

▪ .الحصول على المزيد من الخير يتطلب التضحية ببعض اآلخر: المجتمع يواجه مقايضة

▪ The slope of the PPF tells you the opportunity cost of one good in terms of

the other.

▪ .منحدر بي بي اف يخبرك تكلفة فرصة واحدة جيدة من ناحية أخرى

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF and Opportunity Cost

The slope of a line

equals the “rise over the run,” the amount the line rises

when you move to the right by one unit.

االرتفاع فوق "يساوي ميل خط ما ، وهو المقدار الذي يرتفع به " المدى

الخط عند االنتقال إلى اليمين بواسطة .وحدة واحدة

–1000

100 slope = = –10

Here, the opportunity

cost of a computer is

10 tons of wheat. هنا ، تكلفة الفرصة البديلة

طن من القمح 10للكمبيوتر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

PPF and Opportunity Cost

In which country is the opportunity cost of cloth lower?

FRANCE ENGLAND

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

England, because its PPF is not as steep as France’s. FRANCE ENGLAND

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Economic Growth and the PPF

With additional resources

or an improvement in technology,

the economy can

produce more cmputers,

more wheat,

or any combination in

between. باستخدام موارد إضافية أو تحسين في التكنولوجيا ، يمكن لالقتصاد إنتاج المزيد من أجهزة الكمبيوتر ، أو المزيد من القمح ، أو أي مزيج بينهما

Economic growth shifts the PPF outward.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Shape of the PPF

▪ The PPF could be a straight line or bow-shaped

▪ Depends on what happens to opportunity cost as economy shifts resources from one industry

to the other.

▪ يمكن أن يكون بي بي اف خط مستقيم أو على شكل قوس

▪ يعتمد على ما يحدث لتكلفة الفرصة البديلة عندما يحول االقتصاد الموارد من صناعة إلى أخرى

▪ If opp. cost remains constant, PPF is a straight line.

(In the previous example, opp. cost of a computer was always 10 tons of

wheat.)

.مستقيمتكلفة الفرصة ثابتة ، فإن بي بي اف هي خط اذا بقيت

(.أطنان من القمح 10في المثال السابق ، كانت تكلفة تشغيل الكمبيوتر )

▪ If opp. cost of a good rises as the economy produces more of the good,

PPF is bow-shaped.

▪ إذا كانت تكلفة الفرصة البديلة لسلعة ما ترتفع بينما االقتصاد ينتج اكثر من سلعه، فإن بي بي اف تكون على شكل قوس

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

Mountain Bikes

B e

e r As the economy shifts

resources

from beer to mountain bikes:

▪ PPF becomes steeper

▪ opp. cost of mountain

bikes increases

▪ بينما ينقل االقتصاد الموارد من :البيرة إلى الدراجات الجبلية

▪ بي بي اف تصبح أكثر حدة

▪ تكلفة الدراجات الجبلية يزيد. مقابل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

At point A,

most workers are

producing beer,

even those who

are better suited

to building bikes.

So, do not have to

give up much beer

to get more bikes.

في النقطة اي ، معظم العمال ينتجون البيرة ، حتى أولئك الذين هم أكثر مالءمة

.لبناء الدراجات

لذلك ، ال تضطر إلى التخلي عن الكثير من البيرة للحصول على المزيد من

.الدراجات

Mountain Bikes

B e

e r At A, opp. cost of

mtn bikes is low.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

At B, most workers are

producing bikes.

The few left in beer are the

best brewers.

Producing more bikes would

require shifting some of the

best brewers away from beer

production,

causing a big drop in beer

output.

. في بي ، معظم العمال ينتجون الدراجات القليلة المتبقية في البيرة هي أفضل مصانع

.البيرة

يتطلب إنتاج المزيد من الدراجات نقل بعض أفضل مصانع البيرة بعيداً عن إنتاج البيرة ، مما يتسبب في انخفاض كبير في إنتاج .البيرة

Mountain Bikes

B e

e r

At B, opp. cost of mtn bikes is high.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

▪ So, PPF is bow-shaped when different workers have different skills,

different opportunity costs of producing one good in terms of the other.

▪ لذا ، بي بي اف هي على شكل القوس عندما يكون لدى العاملين المختلفين مهارات مختلفة ، .تكاليف فرصة مختلفة إلنتاج سلعة واحدة من ناحية أخرى

▪ The PPF would also be bow-shaped when there is some other

resource, or mix of resources with varying opportunity costs

(E.g., different types of land suited for different uses).

كما سيكون طراز بي بي بي على شكل قوس عند وجود بعض الموارد األخرى ، أو مزيج من الموارد بتكاليف الفرصة البديلة المتفاوتة

(.على سبيل المثال ، أنواع مختلفة من األراضي مناسبة لالستخدامات المختلفة)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF: A Summary

▪ The PPF shows all combinations of two goods that an economy can

possibly produce, given its resources and technology. وتكنلوجيتهويوضح بي بي أف كل مزيج من سلعتين يمكن لالقتصاد أن ينتجهما ، نظرا لموارده

▪ The PPF illustrates the concepts of tradeoff and opportunity cost,

efficiency and inefficiency, unemployment, and economic growth.

▪ .يوضح بي بي اف مفاهيم المقايضة وتكلفة الفرص ، والكفاءة ، وعدم الكفاءة ، والبطالة ، والنمو االقتصادي

▪ A bow-shaped PPF illustrates the concept of increasing opportunity

cost.

▪ .يوضح الشكل بي بي اف مفهوم زيادة تكلفة الفرصة البديلة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Microeconomics and Macroeconomicsمهم

▪ Microeconomics is the study of how households and

firms make decisions and how they interact in markets. ▪ األسواقاالقتصاد الجزئي هو دراسة كيفية اتخاذ األسر والشركات التخاذ القرارات وكيفية تفاعلها في

▪ Macroeconomics is the study of economy-wide

phenomena, including inflation, unemployment, and

economic growth.

▪ .االقتصاد الكلي هو دراسة الظواهر االقتصادية الشاملة ، بما في ذلك التضخم والبطالة والنمو االقتصادي

▪ These two branches of economics are closely intertwined, yet

distinct—they address different questions.

▪ هذان الفرعان من فروع االقتصاد مترابطان بشكل وثيق ، ومع ذلك يتميزان بخصائص مختلفة

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Economist as Policy Advisor ر االقتصادي كمستشا السياسه

▪ As scientists, economists make

positive statements, which attempt to describe the world as it is.

▪ As policy advisors, economists make

▪ بوصفهم مستشارين للسياسات . وكعلماء ، يدلي االقتصاديون بتصريحات إيجابية تحاول أن تصف العالم كما هو ، فإن االقتصاديين يقومون بذلك normative statements,

which attempt to prescribe how the world should be.

▪ Positive statements can be confirmed or refuted, normative statements cannot.

▪ .البيانات المعيارية ، التي تحاول وصف كيف يجب أن يكون العالم

▪ يمكن تأكيد أو دحض البيانات اإليجابية ، وال يمكن للبيانات المعيارية

▪ Govt employs many economists for policy advice. E.g., the U.S. President has

a Council of Economic Advisors, which the author of this textbook chaired from

2003 to 2005.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Identifying positive vs. normative مقابل المعياريةحدد اإليجابية

Which of these statements are “positive” and which are “normative”? How can you tell the difference?

؟؟ كيف يمكنك معرفة الفرق"معيارية"وأيها " إيجابية"أي من هذه العبارات

A Prices rise when the government increases the quantity of money.

a. .ترتفع األسعار عندما تزيد الحكومة من كمية المال

B The government should print less money.

b. أقليجب على الحكومة طباعة أموال

C A tax cut is needed to stimulate the economy.

c. .هناك حاجة إلى خفض الضرائب لتحفيز االقتصاد

d. An increase in the price of burritos will cause an increase in consumer

demand for music downloads. الزيادة في سعر بوريتوس سيؤدي إلى زيادة في الطلب االستهالكي .على تنزيالت الموسيقى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

a. Prices rise when the government increases the

quantity of money.

Positive – describes a relationship, could use data to confirm or

refute.

.الدحضيصف العالقة ، يمكن أن يستخدم البيانات للتأكيد أو -إيجابي

b. The government should print less money.

Normative – this is a value judgment, cannot be confirmed or

refuted. الدحضأو يمكن التأكيد وهذا هو حكم القيمة ، ال -المعيارية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

c. A tax cut is needed to stimulate the economy.

Normative – another value judgment. حكم قيمه أخرى

d. An increase in the price of burritos will cause an

increase in consumer demand for music

downloads.

Positive – describes a relationship.

Note that a statement need not be true to be positive.

.الحظ أنه ال يجب أن يكون البيان صحيًحا ليكون إيجابيًا. يصف العالقة -اإليجابي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why Economists Disagree

▪ Economists often give conflicting policy advice.

▪ They sometimes disagree about the validity of alternative positive theories about the world.

▪ They may have different values and, therefore, different normative

views about what policy should try to accomplish.

▪ Yet, there are many propositions about which most economists

agree.

▪ .غالباً ما يقدم االقتصاديون نصائح سياسية متضاربة

▪ .في بعض األحيان يختلفون حول صحة النظريات اإليجابية البديلة حول العالم

▪ قد يكون لديهم قيم مختلفة ، وبالتالي ، وجهات نظر معيارية مختلفة حول ما يجب أن تحاول .السياسة تحقيقه

▪ ومع ذلك ، هناك العديد من المقترحات التي يتفق عليها معظم االقتصاديين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Propositions about Which Most Economists Agree (and % who agree)

▪ A ceiling on rents reduces the quantity and quality

of housing available. (93%)

▪ Tariffs and import quotas usually reduce general

economic welfare. (93%)

▪ The United States should not restrict employers

from outsourcing work to foreign countries. (90%)

▪ The United States should eliminate agriculture

subsidies. (85%)

continued…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Propositions about Which Most Economists Agree (and % agreeing)

▪ The gap between Social Security funds and expenditures will become unsustainably large

within the next fifty years if current policies remain

unchanged. (85%)

▪ A large federal budget deficit has an adverse effect

on the economy. (83%)

▪ A minimum wage increases unemployment among

young and unskilled workers. (79%)

▪ Effluent taxes and marketable pollution permits

represent a better approach to pollution control

than imposition of pollution ceilings. (78%)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: Who Studies Economics?

▪ Ronald Reagan, President of the United States

▪ Barbara Boxer, U.S. Senator

▪ Sandra Day-O’Connor, Former Supreme Court Justice

▪ Anthony Zinni, Former General, U.S. Marine Corps

▪ Kofi Annan, Former Secretary General, United Nations

▪ Meg Witman, Chief Executive Officer, eBay

▪ Steve Ballmer, Chief Executive Officer, Microsoft

▪ Arnold Schwarzenegger, Former Gov. of California, Actor

▪ Ben Stein, Political Speechwriter, Actor, Game Show Host

▪ Mick Jagger, Singer for the Rolling Stones

▪ John Elway, NFL Quarterback

▪ Tiger Woods, Golfer

▪ Diane von Furstenburg, Fashion Designer

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• As scientists, economists try to explain the world using models with

appropriate assumptions.

• مناسبةكعلماء ، يحاول االقتصاديون شرح العالم باستخدام نماذج مع افتراضات

• Two simple models are the Circular-Flow Diagram and the

Production Possibilities Frontier.

• اإلنتاجنموذجان بسيطان هما مخطط التدفق الدائري وحدود

• Microeconomics studies the behavior of consumers and firms, and their

interactions in markets. Macroeconomics studies the economy as a whole.

• االقتصاد الكلي يدرس . يدرس االقتصاد الجزئي سلوك المستهلكين والشركات وتفاعالتهم في األسواق .االقتصاد ككل

• As policy advisers, economists offer advice on how to improve the

world. كمستشارين للسياسة ، يقدم االقتصاديون المشورة حول كيفية تحسين العالم.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• Why do people—and nations—choose to be

economically interdependent?

• How can trade make everyone better off?

• What is absolute advantage?

What is comparative advantage?

How are these concepts similar?

How are they different?

Interdependence الترابط

Every day you rely on

many people from around

the world, most of whom

you’ve never met, to provide

you with the goods

and services you enjoy.

كل يوم تعتمد على العديد من األشخاص من جميع أنحاء العالم ، ومعظمهم لم

تلتق بهم مطلًقا ، لتزويدك بالسلع .والخدمات التي تستمتع بها

coffee from Kenya

dress shirt from China

cell phone from Taiwan

hair gel from Cleveland, OH

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Interdependence

▪ One of the Ten Principles from Chapter 1:

Trade can make everyone better off.

▪ We now learn why people—and nations— choose to be interdependent,

and how they can gain from trade.

Our Example

▪ Two countries: the U.S. and Japan

▪ Two goods: computers and wheat

▪ One resource: labor, measured in hours

▪ We will look at how much of both goods

each country produces and consumes

▪ if the country chooses to be self-sufficient

▪ if it trades with the other country

– الواليات المتحدة واليابان: دولتان

– أجهزة الكمبيوتر والقمح: سلعتان

– العمل ، يقاس في ساعات: مورد واحد

– سوف ننظر إلى كمية البضائع التي تنتجها وتستهلكها كل دولة

– إذا اختار البلد أن يكون مكتفي ذاتيا – إذا كان يتاجر مع البلد اآلخر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Production Possibilities in the U.S. إمكانات اإلنتاج في الواليات المتحدة ▪ The U.S. has 50,000 hours of labor

available for production, per month.

▪ Producing one computer

requires 100 hours of labor.

▪ Producing one ton of wheat requires 10 hours of labor.

▪ .ساعة عمل متاحة لإلنتاج ، في الشهر 50،000لدى الواليات المتحدة

▪ .ساعة من العمل 100يتطلب إنتاج جهاز كمبيوتر واحد

▪ .ساعات من العمل 10يتطلب إنتاج طن واحد من القمح

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat (tons)

The U.S. PPF

The U.S. has enough labor to produce 500 computers,

or 5000 tons of wheat,

or any combination along the PPF. لدى الواليات المتحدة ما يكفي من العمالة إلنتاج

جهاز كمبيوتر 500 طن من القمح 5000أو

أو أي مجموعة على طول بي بي اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat (tons)

The U.S. Without Trade

Suppose the U.S. uses half its labor to produce

each of the two goods.

Then it will produce and consume

250 computers and

2500 tons of wheat. .لنفترض أن الواليات المتحدة تستخدم نصف أعمالها إلنتاج كل سلعتين

طن من القمح 2500جهاز كمبيوتر و 250ثم ستنتج وتستهلك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Derive Japan’s PPF

Use the following information to draw Japan’s PPF.

▪ Japan has 30,000 hours of labor available for

production, per month.

▪ Producing one computer requires 125 hours of

labor.

▪ Producing one ton of wheat requires 25 hours

of labor.

Your graph should measure computers on the

horizontal axis.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Computers

Wheat (tons)

2,000

1,000

200 0

100 300

Japan’s PPF

Japan has enough labor to produce 240 computers,

or 1200 tons of wheat, or any combination along the PPF.

جهاز كمبيوتر 240اليابان لديها ما يكفي من العمالة إلنتاج ،

طن من القمح أو أي مزيج على طول بي بي 1200أو .اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan Without Trade

Computers

Wheat (tons)

2,000

1,000

200 0

100 300

Suppose Japan uses half its labor to produce each

good.

Then it will produce and consume120 computers

and 600 tons of wheat. ثم ستنتج . لنفترض أن اليابان تستخدم نصف أعمالها إلنتاج كل سلعة

طن من القمح 600جهاز كمبيوتر و 120وتستهلك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumption With and Without Trade

▪ Without trade,

▪ U.S. consumers get 250 computers

and 2500 tons wheat.

▪ Japanese consumers get 120 computers

and 600 tons wheat.

▪ We will compare consumption without trade to consumption with trade.

▪ First, we need to see how much of each good is produced and traded by the

two countries.

▪ بدون التجارة ،

▪ .طنًا من القمح 2500جهاز كمبيوتر و 250يصل مستهلكو الواليات المتحدة إلى

▪ .طن قمح 600جهاز كمبيوتر و 120يحصل المستهلكون اليابانيون على

▪ .سنقارن االستهالك بدون التجارة باالستهالك مع التجارة

▪ .أوالً ، نحتاج إلى معرفة كمية السلع التي يتم إنتاجها وتداولها من قبل البلدين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Production under trade

1. Suppose the U.S. produces 3400 tons of wheat. How many computers

would the U.S. be able to produce with its remaining labor? Draw the point

representing this combination of computers and wheat on the U.S. PPF.

2. كم عدد أجهزة الكمبيوتر التي ستتمكن الواليات . طنًا من القمح 3400لنفترض أن الواليات المتحدة تنتج المتحدة من إنتاجها بعمليتها المتبقية؟ ارسم النقطة التي تمثل هذا الجمع بين أجهزة الكمبيوتر والقمح في الواليات المتحدة بي بي اف

2. Suppose Japan produces 240 computers. How many tons of wheat would Japan be able to produce with its

remaining labor? Draw this point on Japan’s PPF.

3. كم طنًا من القمح تستطيع اليابان . جهاز كمبيوتر 240لنفترض أن اليابان تنتج إنتاجه بعمليتها المتبقية؟ ارسم هذه النقطة في اليابان بي بي اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat (tons)

U.S. Production With Trade

Producing 3400 tons of wheat requires 34,000 labor hours.

The remaining 16,000 labor hours are used to produce 160 computers.

ساعة 34000طن من القمح يتطلب 3400إنتاج .عمل

16000وتُستخدم ساعات العمل المتبقية البالغة .جهاز كمبيوتر 160ساعة إلنتاج

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan’s Production With Trade

Producing 240 computers requires all

of Japan’s 30,000 labor hours.

Computers

Wheat (tons)

2,000

1,000

200 0

100 300

So, Japan would produce

0 tons of wheat. حاسوبًا جميع ساعات العمل في 240يتطلب إنتاج

.ساعة 30،000اليابان التي تصل إلى

.طن من القمح 0لذلك ، ستنتج اليابان

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Exports & Imports

▪ Exports:

goods produced domestically and sold abroad ▪ الخارجالسلع المنتجة محليا وتباع في : الصادرات

To export means to sell domestically produced goods

abroad.

.لتصدير وسائل بيع السلع المنتجة محليا في الخارج

▪ Imports:

goods produced abroad and sold domestically

▪ محلياً السلع المنتجة في الخارج وتباع : الواردات

To import means to purchase goods produced in other

countries. الستيراد وسائل لشراء السلع المنتجة في بلدان أخرى.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Consumption under trade

Suppose the U.S. exports 700 tons of wheat to Japan, and imports 110

computers from Japan.

(So, Japan imports 700 tons wheat and exports 110 computers.)

▪ How much of each good is consumed in the U.S.? Plot this combination

on the U.S. PPF.

▪ How much of each good is consumed in Japan? Plot this combination on

Japan’s PPF.

▪ أجهزة كمبيوتر من 110طن من القمح إلى اليابان ، وتستورد 700لنفرض أن الواليات المتحدة تصدر .اليابان

▪ (.أجهزة كمبيوتر 110طن من القمح وتصدير 700لذلك ، تستورد اليابان )

▪ ما مقدار ما تستهلكه كل سلعة في الواليات المتحدة؟ ارسم هذه المجموعة على الواليات المتحدة بي بي .اف

▪ .بي بي افعلى اليابان كم من كل سلعة يتم استهالكها في اليابان؟ ارسم هذه التشكيلة © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat (tons)

U.S. Consumption With Trade

2700 270 = amount consumed

0 110 + imported

700 0 – exported

3400 160 produced

wheat computers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan’s Consumption With Trade

Computers

Wheat (tons)

2,000

1,000

200 0

100 300

700 130 = amount consumed

700 0 + imported

0 110 – exported

0 240 produced

wheat computers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Trade Makes Both Countries Better Off

200 2700 2500 wheat

20 270 250 computers

gains from

trade

consumption

with trade

consumption

without trade

U.S.

100 700 600 wheat

10 130 120 computers

gains from

trade

consumption

with trade

consumption

without trade

Japan

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Where Do These Gains Come From?

▪ Absolute advantage: the ability to produce a good

using fewer inputs than another producer ▪ اآلخرالقدرة على إنتاج منتج جيد باستخدام مدخالت أقل من المنتج : الميزة المطلقة

▪ The U.S. has an absolute advantage in wheat: producing a ton of wheat

uses 10 labor hours in the U.S. vs. 25 in Japan.

▪ ساعات عمل في الواليات المتحدة 10إنتاج طن من القمح يستخدم : للواليات المتحدة ميزة مطلقة في القمح .ساعة في اليابان 25مقابل

▪ If each country has an absolute advantage in one good and

specializes in that good, then both countries can gain from trade.

▪ فيمكن لكال البلدين االستفادة من هذي السعه ، إذا كان لكل بلد ميزة مطلقة في سلعة واحدة ومتخصص في .التجارة

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Where Do These Gains Come From?

▪ Which country has an absolute advantage in computers?

▪ Producing one computer requires

125 labor hours in Japan,

but only 100 in the U.S.

▪ The U.S. has an absolute advantage in both goods!

▪ الذي لديه ميزة مطلقة في أجهزة الكمبيوتر؟أي البلد

▪ .في الواليات المتحدة 100ساعة عمل في اليابان ، ولكن فقط 125يتطلب إنتاج جهاز كمبيوتر واحد

▪ !تتمتع الواليات المتحدة بميزة مطلقة في البضائع

So why does Japan specialize in computers? Why do both

countries gain from trade?

إذن لماذا تتخصص اليابان في أجهزة الكمبيوتر؟ لماذا يكسب كال البلدين من التجارة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two Measures of the Cost of a Good قياسات التكلفة الجيدةاثنين من

▪ Two countries can gain from trade when each specializes in the

good it produces at lowest cost. ▪ .يمكن لبلدين أن يستفيدا من التجارة عندما يتخصص كل منهما في السلعة التي ينتجها بأقل تكلفة

▪ Absolute advantage measures the cost of a good in terms of the inputs required to produce it.

▪ .تقوم الميزة المطلقة بقياس تكلفة السلعة من حيث المدخالت الالزمة إلنتاجها

▪ Recall:

Another measure of cost is opportunity cost.

▪ In our example, the opportunity cost of a computer is the amount of wheat

that could be produced using the labor needed to produce one computer.

▪ .مقياس آخر للتكلفة هو تكلفة الفرصة: تذكير

▪ في مثالنا ، فإن تكلفة الفرصة البديلة للكمبيوتر هي كمية القمح التي يمكن إنتاجها باستخدام اليد العاملة

الالزمة إلنتاج حاسوب واحد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Opportunity Cost and Comparative Advantage تكلفة الفرصة والمزايا النسبية

▪ Comparative advantage: the ability to produce

a good at a lower opportunity cost than another producer ▪ آخرفرصة أقل من منتج سلعه بتكلفة القدرة على إنتاج : الميزة النسبية

▪ Which country has the comparative advantage in

computers?

▪ الكمبيوتر؟يتمتع بميزة نسبية في أجهزة أي البلدالذي

▪ To answer this, must determine the opportunity cost of a

computer in each country.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Opportunity Cost and

Comparative Advantage

▪ The opportunity cost of a computer is

▪ 10 tons of wheat in the U.S., because producing one computer requires

100 labor hours, which instead could produce 10 tons of wheat.

▪ 5 tons of wheat in Japan, because producing one computer requires

125 labor hours, which instead could produce 5 tons of wheat.

▪ تكلفة الفرصة البديلة للكمبيوتر

▪ ساعة عمل ، وهو ما يمكن أن 100أطنان من القمح في الواليات المتحدة ، ألن إنتاج حاسوب واحد يتطلب 10 .أطنان من القمح 10ينتج

▪ 5ساعة عمل ، والتي يمكن أن تنتج 125أطنان من القمح في اليابان ، ألن إنتاج جهاز كمبيوتر واحد يتطلب 5 .أطنان من القمح

▪ So, Japan has a comparative advantage in computers. Lesson:

Absolute advantage is not necessary for comparative advantage!

▪ !الميزة المطلقة ليست ضرورية للميزة النسبية: الدرس. لذلك ، تتمتع اليابان بميزة نسبية في أجهزة الكمبيوتر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Comparative Advantage and Trade الميزة النسبية والتجارة

▪ Gains from trade arise from comparative advantage (differences in

opportunity costs). االختالفات في تكاليف )تنشأ المكاسب من التجارة من الميزة النسبية (.الفرصة البديلة

▪ When each country specializes in the good(s) in which it has a

comparative advantage, total production in all countries is higher, the world’s “economic pie” is bigger, and all countries can gain from

trade.

▪ التي تتمتع فيها بميزة نسبية ، يكون اإلنتاج الكلي في جميع ( السلع)فعندما تتخصص كل دولة في السلعة .العالمية أكبر ، ويمكن أن تستفيد جميع البلدان من التجارة" الكعكة االقتصادية"البلدان أعلى ، وتكون

▪ The same applies to individual producers (like the farmer and the

rancher) specializing in different goods and trading with each other.

▪ المتخصصين في مختلف السلع ( مثل المزارع ومربي الماشية)وينطبق الشيء نفسه على المنتجين الفرديين والتجارة مع بعضهم البعض

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Absolute and comparative advantage Argentina and Brazil each have 10,000 hours of labor per month.

In Argentina, ▪ producing one pound coffee requires 2 hours ▪ producing one bottle wine requires 4 hours

▪ .ساعة عمل في الشهر 10000لدى كل من األرجنتين والبرازيل ▪ في األرجنتين،

▪ ساعة 2إنتاج القهوة باوند واحد يتطلب ▪ ساعات 4إنتاج زجاجة واحدة النبيذ يتطلب

In Brazil, ▪ producing one pound coffee requires 1 hour ▪ producing one bottle wine requires 5 hours

Which country has an absolute advantage in the production of coffee? Which country has a comparative advantage in the production of wine?

في البرازيل،

باوند ساعة واحدةقهوه واحد يتطلب إنتاج

ساعات 5إنتاج زجاجة واحدة من النبيذ يتطلب

؟النبيذلديه ميزة مطلقة في إنتاج القهوة؟ البلد الذي لديه ميزة نسبية في إنتاج أي البلد الذي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Answers Brazil has an absolute advantage in coffee:

▪ Producing a pound of coffee requires only one labor-hour in Brazil, but

two in Argentina.

▪ :البرازيل لديها ميزة مطلقة في القهوة

▪ إن إنتاج رطل من القهوة يتطلب ساعة واحدة فقط من العمل في البرازيل ، ولكن اثنين في األرجنتين

Argentina has a comparative advantage in wine:

▪ Argentina’s opp. cost of wine is two pounds of coffee, because the four labor- hours required

to produce a bottle of wine could instead produce two pounds of coffee.

▪ Brazil’s opp. cost of wine is five pounds of coffee.

▪ :تتمتع األرجنتين بميزة نسبية في النبيذ

▪ األرجنتين تكلفة النبيذ هو اثنين من رطل من القهوة ، ألن ساعات العمل األربعة المطلوبة إلنتاج .زجاجة من النبيذ يمكن أن تنتج بدال من رطل من القهوة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Unanswered Questions…

▪ We made a lot of assumptions about the quantities

of each good that each country produces, trades,

and consumes, and the price at which the countries

trade wheat for computers.

▪ In the real world, these quantities and prices would

be determined by the preferences of consumers

and the technology and resources in both countries.

▪ We will begin to study this in the next chapter.

▪ For now, though, our goal was merely to see how

trade can make everyone better off.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Interdependence and trade allow everyone to enjoy a greater

quantity and variety of goods & services. • .الترابط والتجارة يتيحان للجميع التمتع بكمية وتنوع أكبر من السلع والخدمات

• Comparative advantage means being able to produce a good at a lower opportunity cost. Absolute advantage means being able to

produce a good with fewer inputs.

• الميزة المطلقة تعني القدرة على . الميزة النسبية تعني القدرة على إنتاج سلعة بتكلفة فرصة أقل .إنتاج سلعة ذات مدخالت أقل

• When people—or countries—specialize in the goods in which they have a comparative advantage, the economic “pie” grows and trade can make everyone better off.

• " الكعكة"عندما يتخصص الناس أو البلدان في السلع التي يتمتعون فيها بميزة نسبية ، فإن .االقتصادية تنمو ويمكن أن تجعل التجارة أفضل حاالً

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What factors affect buyers’ demand for goods?

• What factors affect sellers’ supply of goods? • How do supply and demand determine the price

of a good and the quantity sold?

• How do changes in the factors that affect

demand or supply affect the market price and

quantity of a good?

• How do markets allocate resources?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Markets and Competitionمهم

▪ A market is a group of buyers and sellers of a particular product. ▪ .السوق هو مجموعة من المشترين والبائعين لمنتج معين

▪ A competitive market is one with many buyers and sellers, each has a negligible effect on price.

▪ السوق التنافسية هي واحدة مع العديد من المشترين والبائعين ، كل واحد له تأثير ضئيل على .السعر

▪ In a perfectly competitive market:

▪ All goods exactly the same

▪ Buyers & sellers so numerous that no one can affect market price— each is a “price taker”

▪ :في سوق تنافسية تماًما

▪ جميع السلع بالضبط نفس الشيء

▪ فكل واحد منهم هو -المشترون والبائعون كثيرون لدرجة أنه ال يمكن ألحد أن يؤثر على سعر السوق "متخذ السعر »

▪ In this chapter, we assume markets are perfectly competitive.

Demand

▪ The quantity demanded of any good is the amount of the good that

buyers are willing and able to purchase.

• إن الكمية المطلوبة من أي سلعة هي كمية السلعة التي يرغب المشترون في شرائها وقادرين على .شرائها

▪ Law of demand: the claim that the quantity demanded of a good

falls when the price of the good rises, other things equal

• واألشياء يرتفع سعر السلعة ، تنخفض عندما االدعاء بأن الكمية المطلوبة من سلعة : قانون الطلب األخرى متساوية

The Demand Schedule

▪ Demand schedule:

a table that shows the relationship between the price of a good and the

quantity demanded

• جدول يوضح العالقة بين سعر السلعة : جدول الطلب والكمية المطلوبة

▪ Example: Helen’s demand for lattes.

▪ Notice that Helen’s preferences obey the

law of demand.

• .الالتيهطلب هيلين على

• الحظ أن تفضيالت هيلين تخضع لقانون الطلب

Price

lattes

Quantity

of lattes

demanded

$0.00 16

1.00 14

2.00 12

3.00 10

4.00 8

5.00 6

6.00 4

Price of Lattes

Quantity of Lattes

Helen’s Demand Schedule & Curve

Price

lattes

Quantity

of lattes

demanded

$0.00 16

1.00 14

2.00 12

3.00 10

4.00 8

5.00 6

6.00 4

Market Demand versus Individual Demand

▪ The quantity demanded in the market is the sum of the quantities demanded by all buyers at each price.

▪ Suppose Helen and Ken are the only two buyers in the Latte market. (Qd = quantity demanded)

Helen’s Qd

Ken’s Qd

+ = 18

+ = 21

+ = 24

Market Qd

$0.00

6.00

5.00

4.00

3.00

2.00

1.00

Price

The Market Demand Curve for Lattes

P Qd

(Market)

$0.00 24

1.00 21

2.00 18

3.00 15

4.00 12

5.00 9

6.00 6

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters

▪ The demand curve shows how price affects quantity demanded,

other things being equal.

▪ These “other things” are non-price determinants of demand (i.e.,

things that determine buyers’ demand for a good, other than the good’s price(.

▪ Changes in them shift the D curve…

▪ .يوضح منحنى الطلب كيف يؤثر السعر على الكمية المطلوبة ، واألشياء األخرى متساوية

▪ أي األشياء التي تحدد طلب المشترين )هي محددات الطلب غير السعرية " األشياء األخرى"هذه (.على سلعة ما ، بخالف سعر السلعة

▪ التغييرات في تحويل منحنى الطلب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: # of Buyers المشترينعدد من : منحنى الطلب على المنحنى

▪ Increase in # of buyersمهم

increases quantity demanded at each price,

shifts D curve to the right.

▪ زيادة عدد المشترين يزيد الكمية المطلوبة عند كل سعر ، ويحول .منحنى الطلب إلى اليمين

Suppose the number of

buyers increases.

Then, at each P,

Qd will increase

(by 5 in this example).

.لنفترض أن عدد المشترين يزداد

الكمية ثم ، في كل سعر ، سيزداد (.في هذا المثال 5بمقدار )المطلوبه

Demand Curve Shifters: # of Buyers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Incomeمهم

▪ Demand for a normal good is positively related to income.

▪ Increase in income causes increase in quantity demanded at each price, shifts D curve to

the right.

▪ .يرتبط الطلب على سلعة عادية بشكل إيجابي بالدخل

▪ .زيادة الدخل تسبب زيادة في الكمية المطلوبة عند كل سعر ، وتغيير منحنى الطلب إلى اليمين

(Demand for an inferior good is negatively related to income. An

increase in income shifts D curves for inferior goods to the left.)

تؤدي الزيادة في الدخل إلى تحّول منحنيات . يرتبط الطلب على سلعة أدنى ارتباطاً سلبياً بالدخل) (.الطلب للسلع األدنى إلى اليسار

▪ Two goods are substitutes if an increase in the price of one causes

an increase in demand for the other. • اآلخرسلعتان بديلتان إذا أدت الزيادة في سعر واحد إلى زيادة الطلب على

▪ Example: pizza and hamburgers. An increase in the price of pizza increases

demand for hamburgers, shifting hamburger demand curve to the right.

• زيادة في سعر البيتزا يزيد الطلب على الهامبرغر ، ويحول منحنى طلب الهامبرغر . البيتزا والهامبرغر: مثال .إلى اليمين

▪ Other examples: Coke and Pepsi, laptops and desktop computers,CDs and

music downloads

• ، وأجهزة الكمبيوتر المحمولة وأجهزة الكمبيوتر المكتبية ، واألقراص المدمجة فحم الكوك و بيسي : أمثلة أخرى وتنزيل الموسيقى

Demand Curve Shifters: Prices of Related Goods أسعار السلع ذات الصلة: الطلبمحول منحنى

▪ Two goods are complements if an increase in the price of one

causes a fall in demand for the other.

• اآلخرالطلب على تسبب في انخفاض هناك سلعتان متكاملتان إذا أدت الزيادة في سعر واحد

▪ Example: computers and software. If price of computers rises, people buy

fewer computers, and therefore less software. Software demand curve shifts

left.

• إذا ارتفع سعر أجهزة الكمبيوتر ، يشتري الناس عدًدا أقل . أجهزة الكمبيوتر والبرمجيات: على سبيل المثال .ينتقل الى اليسارمنحنى الطلب على البرامج . من أجهزة الكمبيوتر ، وبالتالي يقل عدد البرامج

▪ Other examples: college tuition and textbooks,

bagels and cream cheese, eggs and bacon

Demand Curve Shifters: Prices of Related Goods أسعار السلع ذات الصلة: الطلبمحول منحنى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Tastes محوالت منحنى الطلب: االذواق

▪ Anything that causes a shift in tastes toward a good will increaseمهم

demand for that good and shift its D curve to the right. ▪ منحنى الطلب هذه السلعه ويحول الطلب على السلعه سيزيد أي شيء يسبب تحوال في األذواق نحو

إلى اليمين. ▪ الزياده دايم تحول المنحنى الى اليمين والنقص يحوله الى اليسار“ ”

▪ Example:

The Atkins diet became popular in the ’90s,

caused an increase in demand for eggs,

shifted the egg demand curve to the right.

▪ أصبح اتباع نظام غذائي اتكينس شائعًا في التسعينيات ، مما أدى إلى زيادة الطلب على البيض ، : مثال .وتحول منحنى طلب البيض إلى اليمين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Expectations التوقعات:الطلب محوالت منحنى

▪ Expectations affect consumers’ buying decisions. ▪ .تؤثر التوقعات على قرارات الشراء لدى المستهلكين

▪ Examples:

▪ If people expect their incomes to rise,

their demand for meals at expensive restaurants may increase now.

▪ If the economy sours and people worry about their future job security,

demand for new autos may fall now.

▪ :أمثلة

▪ إذا كان الناس يتوقعون ارتفاع دخولهم ، فقد يزداد اآلن طلبهم على وجبات الطعام في المطاعم باهظة .الثمن

▪ إذا كان االقتصاد مرتبًكا والناس قلقون بشأن أمنهم الوظيفي في المستقبل ، فقد ينخفض الطلب على .السيارات الجديدة اآلن

Summary: Variables That Influence Buyers

Variable A change in this variable…

Price …causes a movement along the D curve

# of buyers …shifts the D curve

Income …shifts the D curve

Price of related goods …shifts the D curve

Tastes …shifts the D curve

Expectations …shifts the D curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Demand Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. The price of iPods falls انخفاض سعر االيبود

B. The price of music downloads

falls

C. تنزيالت الموسيقىانخفاض سعر

C. The price of CDs falls

D. انخفاض سعر السي دي

Draw a demand curve for music downloads. What happens to it in each

of the following scenarios? Why? ؟اولماذا ماذا يحدث لها في كل من السيناريوهات التالية؟ . ارسم منحنى طلب على تنزيالت الموسيقى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price of music down- loads

Quantity of music downloads

D1 D2

Music downloads and

iPods are complements.

A fall in price of iPods

shifts the demand curve for

music downloads

to the right.

تنزيالت الموسيقى وأجهزة أي بود هي .مكملة

إلى " االيبود»يؤدي انخفاض سعر الطلب لتنزيل الموسيقى تغييرمنحنى

.إلى اليمين

ACTIVE LEARNING 1

A. Price of iPods falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The D curve does not shift.

Move down along curve to a

point with lower P, higher Q.

.ال يتغير منحنى الطلب

التحرك ألسفل على طول المنحنى إلى نقطة أكبروكمية مع انخفاض السعر ،

Price of music down- loads

Quantity of music downloads

Q1 Q2

ACTIVE LEARNING 1

B. Price of music downloads falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CDs and music downloads

are substitutes.

A fall in price of CDs shifts

demand for music downloads

to the left.

االقراص المدمجه وتنزيل الموسيقى هي .بدائل

انخفاض سعر االقراص المدمجه يغير .الطلب على تنزيالت الموسيقى الى اليسار

Price of music down- loads

Quantity of music downloads

D1 D2

ACTIVE LEARNING 1

C. Price of CDs falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply

▪ The quantity supplied of any good is the amount that sellers are

willing and able to sell. ▪ .الكمية المعروضة من أي سلعة هي المبلغ الذي يرغب البائع في بيعه وقادر على بيعه

▪ Law of supply: the claim that the quantity supplied of a good rises

when the price of the good rises, other things equal

▪ السلعه، االمور عندما يرتفع سعر السلعه ترتفع االدعاء بأن الكمية الموردة من : قانون التوريد األخرى متساوية

▪

▪ Supply schedule:

A table that shows the relationship between

the price of a good and the quantity supplied.

• جدول يبين العالقة بين سعر السلعة والكمية : جدول العرض .المعروضة

▪ Example:

Starbucks’ supply of lattes.

▪ مثل عرض ستاربكس من الالتيه

The Supply Schedule

▪ Notice that Starbucks’ supply

schedule obeys the law of supply. ▪ الحظ أن جدول التوريد لستاربكس يخضع لقانون

.التوريد

▪

Price

lattes

Quantity

of lattes

supplied

$0.00 0

1.00 3

2.00 6

3.00 9

4.00 12

5.00 15

6.00 18

Starbucks’ Supply Schedule & Curve

Price

lattes

Quantity

of lattes

supplied

$0.00 0

1.00 3

2.00 6

3.00 9

4.00 12

5.00 15

6.00 18

Market Supply versus Individual Supply ▪ The quantity supplied in the market is the sum of

the quantities supplied by all sellers at each price.

▪ Suppose Starbucks and Jitters are the only two sellers in this market. (Qs = quantity supplied)

• .الكمية المعروضة في السوق هي مجموع الكميات التي يقدمها جميع البائعين عند كل سعر

• .لنفترض أن ستاربكس و جيترز هما البائعان الوحيدان في هذا السوق

Starbucks

Jitters

+ = 10

+ = 5

+ = 0

Market Qs

$0.00

6.00

5.00

4.00

3.00

2.00

1.00

Price

P QS

(Market)

$0.00 0

1.00 5

2.00 10

3.00 15

4.00 20

5.00 25

6.00 30

The Market Supply Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shiftersمحول منحنى العرض

▪ The supply curve shows how price affects quantity supplied, other

things being equal. ▪ يوضح منحنى العرض كيف يؤثر السعر على الكمية المعروضة ، بينما تساوي األشياء األخرى

▪ These “other things” are non-price determinants of supply.

▪ .هي محددات العرض غير السعرية" األشياء األخرى"هذه

▪ Changes in them shift the S curve…

▪ تغيرات في تحويل منحنى العرض

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Input Prices أسعار :محوالت منحنى العرض المدخالت

▪ Examples of input prices:

wages, prices of raw materials.

▪ A fall in input prices makes production

more profitable at each output price,

so firms supply a larger quantity at each price,

and the S curve shifts to the right.

▪ .األجور ، أسعار المواد الخام: أمثلة على أسعار المدخالت

▪ إن انخفاض أسعار المدخالت يجعل اإلنتاج أكثر ربحية في كل سعر ناتج ، لذلك تقدم الشركات .كمية أكبر من كل سعر ، وينحرف منحنى العرض إلى اليمين

Suppose the price of

milk falls.

At each price, the

quantity of

lattes supplied

will increase

(by 5 in this example).

.لنفترض انخفاض سعر الحليب

عند كل سعر ، ستزداد كمية التيه (في هذا المثال 5بمقدار )الموردة

Supply Curve Shifters: Input Prices

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Technology

▪ Technology determines how much inputs are required to

produce a unit of output.

▪ A cost-saving technological improvement has

the same effect as a fall in input prices,

shifts S curve to the right.

▪ .تحدد التكنولوجيا كمية المدخالت المطلوبة إلنتاج وحدة من المخرجات

▪ إن التحسين التكنولوجي الموفر للتكاليف له نفس التأثير مثل انخفاض أسعار .اليمينوتحول منحنى العرض إلى المدخالت ،

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: # of Sellers محوالت منحنى العرض: عدد من البائعين

▪ An increase in the number of sellers increases

the quantity supplied at each price,

shifts S curve to the right.

الزياده في عدد البائعين يزيد الكميه المعروضه عند كل سعر

ويحول منحنى العرض الى اليمين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Expectations

▪ Example:

▪ Events in the Middle East lead to expectations of higher oil prices.

▪ In response, owners of Texas oilfields reduce supply now, save some

inventory to sell later at the higher price.

▪ S curve shifts left.

▪ :مثال

▪ .األحداث في الشرق األوسط تؤدي إلى توقعات بارتفاع أسعار النفط

▪ رداً على ذلك ، يخفض أصحاب حقول النفط في تكساس العرض اآلن ، باستثناء بعض المخزون لبيعه الحقاً بسعر .أعلى

▪ .الى اليسارتحول منحنى العرض

▪ In general, sellers may adjust supply* when their expectations of

future prices change. (*If good not perishable)

▪ إذا كانت جيدة غير قابلة . )* عندما تتغير توقعاتهم من األسعار المستقبلية* بشكل عام ، يمكن للبائعين تعديل العرض (للتلف

Variable A change in this variable…

Summary: Variables that Influence Sellers

Price …causes a movement along the S curve

Input Prices …shifts the S curve

Technology …shifts the S curve

# of Sellers …shifts the S curve

Expectations …shifts the S curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Draw a supply curve for tax return

preparation software. What happens to it in each of the following scenarios?

ماذا . ارسم منحنى عرض لبرنامج إعداد اإلقرار الضريبي يحدث لها في كل من السيناريوهات التالية؟ A. A. Retailers cut the price of

the software. B. .خفض تجار التجزئة سعر البرنامج

B. B. A technological advance allows the software to be produced at lower cost.

C. .يسمح التقدم التكنولوجي أن يتم إنتاج البرنامج بتكلفة أقل

C. C. Professional tax return preparers raise the price of the services they provide.

D. .يقوم معدو اإلقرار الضريبي المحترفون برفع سعر الخدمات التي يقدمونها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Supply Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S curve does

not shift. Move down

along the curve to a lower

P and lower Q.

.منحنى العرض ال يتغير

التحرك ألسفل على طول المنحنى إلى انخفاض السعر وانخفاض الكمية

Price of tax return software

Quantity of tax return software

Q1 Q2

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

A. Fall in price of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S curve shifts to the

right:

at each price,

Q increases.

منحنى العرض ينتقل إلى :اليمين

عند كل سعر ، تزداد الكمية

Price of tax return software

Quantity of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

B. Fall in cost of producing the software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

This shifts the demand

curve for tax preparation

software, not the supply

curve.

هذا يغير منحنى الطلب على برامج إعداد الضرائب ، وليس منحنى

.العرض

Price of tax return software

Quantity of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

C. Professional preparers raise their price

Supply and Demand Together

D S Equilibrium: P has reached

the level where

quantity supplied equals

quantity demanded

وصل السعر إلى المستوى الذي تساوي الكمية المعروضة الكمية المطلوبة

D S P

Equilibrium price:

P QD QS

$0 24 0

1 21 5

2 18 10

3 15 15

4 12 20

5 9 25

6 6 30

the price that equates quantity supplied with quantity demanded السعر الذي يساوي الكمية المعروضة مع الكمية المطلوبة

D S P

Equilibrium quantity:

P QD QS

$0 24 0

1 21 5

2 18 10

3 15 15

4 12 20

5 9 25

6 6 30

the quantity supplied and quantity demanded at the equilibrium price الكمية المعروضة والكمية المطلوبة عند سعر التوازن

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded عندما تكون الكمية المعروضة أكبر من الكمية المطلوبة

Surplus Example: If P = $5,

then QD = 9 lattes

and QS = 25 lattes

resulting in a surplus of 16 lattes

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded

Facing a surplus, sellers try to increase sales by cutting price.

في مواجهة الفائض ، يحاول البائعون زيادة المبيعات .عن طريق خفض السعر

This causes QD to rise

Surplus

…which reduces the

surplus. .مما يقلل من الفائض

and QS to fall…

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded

Facing a surplus, sellers try to increase sales by cutting price.

This causes QD to rise and QS to fall.

Surplus

Prices continue to fall until

market reaches equilibrium. تستمر األسعار في االنخفاض حتى يصل السوق إلى التوازن

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied عندما تكون الكمية المطلوبة أكبر من الكمية المعروضة

Example: If P = $1,

then QD = 21 lattes

and QS = 5 lattes

resulting in a shortage of 16 lattes

Shortage

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied

Facing a shortage, sellers raise

the price, في مواجهة النقص ، يرفع البائع السعر causing QD to fall

…which reduces the shortage.

and QS to rise,

Shortage

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied

Facing a shortage, sellers raise the price,

causing QD to fall

and QS to rise.

Shortage

Prices continue to rise until market reaches equilibrium.

تستمر األسعار في االرتفاع حتى يصل السوق إلى .التوازن

Three Steps to Analyzing Changes in Eq’m

To determine the effects of any event,

1. Decide whether event shifts S curve,

D curve, or both.

2. Decide in which direction curve shifts.

3. Use supply—demand diagram to see

how the shift changes eq’m P and Q.

4. لتحديد تأثيرات أي حدث ،

5. .قرر ما إذا كان الحدث سيؤدي إلى تحّول منحنى العرض أو منحنى الطلب أو كليهما. 1

6. .تقرر في أي اتجاه منحنى التحوالت. 2

7. لكميةواسعر التوازن في كيفية ان التحول يغير لطلب لمعرفة ا -ض لعرامخطط م ستخدا 3.

EXAMPLE: The Market for Hybrid Cars

price of hybrid cars

quantity of hybrid cars

STEP 1:

D curve shifts

because price of gas

affects demand for

hybrids.

S curve does not

shift, because price

of gas does not

affect cost of

producing hybrids.

STEP 2:

D shifts right

because high gas

price makes hybrids

more attractive

relative to other cars.

EXAMPLE 1: A Shift in Demand

EVENT TO BE ANALYZED:

Increase in price of gas.

STEP 3:

The shift causes an

increase in price

and quantity of

hybrid cars.

EXAMPLE 1: A Shift in Demand

Notice:

When P rises, producers

supply

a larger quantity

of hybrids, even though the

S curve has not shifted. عندما يرتفع السعر ، يقدم : مالحظة

المنتجون كمية أكبر من السيارات الهجينة ، على الرغم من أن منحنى العرض لم يتغير

Always be careful

to distinguish b/w

a shift in a curve

and a movement

along the curve.

Terms for Shift vs. Movement Along Curveمهم

▪ Change in supply: a shift in the S curve

occurs when a non-price determinant of supply changes (like technology or

costs)

تحول في منحنى العرض: التغير في العرض

(مثل التكنولوجيا أو التكاليف)يحدث عندما يكون هناك محدد غير السعر لتغير العرض

▪ Change in the quantity supplied:

a movement along a fixed S curve occurs when P changes

• عندما يتغير السعريحدث , ثابتحركة على منحنى عرض : التغيير في الكمية المعروضة

▪ Change in demand: a shift in the D curve

occurs when a non-price determinant of demand changes (like income or #

of buyers)

تحول في منحنى الطلب: التغيير في الطلب

(مثل الدخل أو عدد المشترين)يحدث عندما يتغير محدد غير السعر في الطلب

▪ Change in the quantity demanded:

a movement along a fixed D curve

occurs when P changes

حركة على منحنى الطلب الثابت: التغيير في الكمية المطلوبة

يحدث عندما يتغير السعر

STEP 1:

S curve shifts

because event affects

cost of production.

D curve does not

shift, because

production technology

is not one of the

factors that affect

demand.

STEP 2:

S shifts right

because event

reduces cost,

makes production

more profitable at

any given price.

EXAMPLE 2: A Shift in Supplyمهم

EVENT: New technology

reduces cost of producing hybrid cars.

تقلل التكنولوجيا الجديدة من تكلفة إنتاج السيارات .الهجينة

STEP 3:

The shift causes price to

fall and quantity to rise. التحول يؤدي إلى انخفاض السعر والكمية في االرتفاع

EXAMPLE 3: A Shift in Both Supplyمهم

and Demand P

EVENTS: Price of gas rises AND new technology reduces production costs

جديدة تقلل تكاليف اإلنتاجالغاز يرتفع وتقنية سعر

STEP 1:

Both curves shift.

STEP 2:

Both shift to the right.

STEP 3:

Q rises, but effect on P is ambiguous:

If demand increases more than supply, P rises.

EXAMPLE 3: A Shift in Both Supply

and Demand

STEP 3, cont.

EVENTS: price of gas rises AND new technology reduces production costs

But if supply

increases more

than demand,

P falls.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Use the three-step method to analyze the effects of each event on the

equilibrium price and quantity of music downloads. .استخدم طريقة الثالث خطوات لتحليل تأثيرات كل حدث على سعر التوازن وكمية تنزيالت الموسيقى

Event A: A fall in the price of CDs

المدمجهانخفاض في أسعار األقراص

Event B: Sellers of music downloads negotiate a reduction in the

royalties they must pay for each song they sell.

يبيعونهايتفاوض بائعو تنزيالت الموسيقى على انخفاض في اإلتاوات التي يجب عليهم دفعها مقابل كل أغنية

Event C: Events A and B both occur.

ACTIVE LEARNING 3

Shifts in supply and demand

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. D shifts left

The market for music downloads

1. D curve shifts

3. P and Q both fall.

STEPS

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

A. Fall in price of CDs

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The market for music downloads

1. S curve shifts

2. S shifts right

3. P falls, Q rises.

STEPS

(Royalties are part of sellers’ costs(

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

B. Fall in cost of royalties

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

STEPS

1. Both curves shift (see parts A & B).

2. D shifts left, S shifts right.

3. P unambiguously falls.

Effect on Q is ambiguous:

The fall in demand reduces Q,

the increase in supply increases Q.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

C. Fall in price of CDs and fall in cost of royalties

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION:

How Prices Allocate Resources

▪ One of the Ten Principles from Chapter 1:

Markets are usually a good way

to organize economic activity.

▪ In market economies, prices adjust to balance

supply and demand. These equilibrium prices

are the signals that guide economic decisions

and thereby allocate scarce resources.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A competitive market has many buyers and sellers, each of whom

has little or no influence on the market price. • يوجد في السوق التنافسي العديد من المشترين والبائعين ، وكل منهم ال يتمتع بأي تأثير يذكر على سعر

.السوق

• Economists use the supply and demand model to analyze competitive markets.

• .يستخدم االقتصاديون نموذج العرض والطلب لتحليل األسواق التنافسية

• The downward-sloping demand curve reflects the law of demand, which

states that the quantity buyers demand of a good depends negatively on the

good’s price.

• يعكس منحنى الطلب المنحدر انحداًرا لقانون الطلب ، والذي ينص على أن الكمية التي يطلبها المشترون من السلعة تعتمد بشكل سلبي على سعر السلعة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Besides price, demand depends on buyers’ incomes, tastes, expectations, the prices of substitutes and complements, and number of buyers.

If one of these factors changes, the D curve shifts. • وإلى جانب السعر ، يتوقف الطلب على دخول المشترين وأذواقهم وتوقعاتهم وأسعار البدائل والمكمالت وعدد

إذا تغير أحد هذه العوامل ، ينحرف منحنى الطلب. المشترين

• The upward-sloping supply curve reflects the Law of Supply, which states

that the quantity sellers supply depends positively on the good’s price.

• يعكس منحنى العرض التصاعدي المنحدر قانون اإلمداد ، الذي ينص على أن عرض كمية البائعين يعتمد .بشكل إيجابي على سعر البضاعة

• Other determinants of supply include input prices, technology, expectations,

and the # of sellers. Changes in these factors shift the S curve.

• التغييرات في . وتشمل المحددات األخرى للعرض أسعار المدخالت والتكنولوجيا والتوقعات وعدد البائعين .منحنى العرضالعوامل تنقل هذه

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The intersection of S and D curves determines the market

equilibrium. At the equilibrium price, quantity supplied equals

quantity demanded. • المعروضه عند سعر التوازن ، الكمية . يحدد تقاطع منحنيات العرض والطلب توازن السوق

المطلوبةالكمية تساوي

• If the market price is above equilibrium, a surplus results, which

causes the price to fall. If the market price is below equilibrium,

a shortage results, causing the price to rise.

• إذا كان سعر السوق أعلى من التوازن ، فإن هناك فائض في النتائج ، مما يؤدي إلى انخفاض إذا كان سعر السوق أقل من التوازن ، فإن هناك نقص في النتائج ، مما يؤدي إلى ارتفاع . السعر

.السعر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• We can use the supply-demand diagram to analyze the effects of

any event on a market: First, determine whether the event shifts one or both curves.

Second, determine the direction of the shifts. Third, compare the

new equilibrium to the initial one. • أوالً ، تحديد ما إذا كان الحدث : يمكننا استخدام مخطط العرض والطلب لتحليل تأثيرات أي حدث في السوق

.ثالثًا ، قارن التوازن الجديد بالمتوازن األول. اتجاه التحوالتتحديد الثانية ، . يغير أحد المنحني أو كليهما

• In market economies, prices are the signals that guide economic

decisions and allocate scarce resources.

• .في األسواق االقتصادية ، األسعار هي اإلشارات التي توجه القرارات االقتصادية وتخصص الموارد النادرة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are price ceilings and price floors? What are some examples of each?

• How do price ceilings and price floors affect market outcomes?

• How do taxes affect market outcomes?

How do the effects depend on whether the tax is imposed on buyers or sellers?

• What is the incidence of a tax? What determines the incidence?

Government Policies That Alter the Private Market Outcome سياسات الحكومة التي تغير نتائج السوق الخاصة

• Price controls التحكم في السعر

–Price ceiling: a legal maximum on the price of a good or service Example: rent control

– اإليجاراتمراقبة : الحد األقصى القانوني لسعر السلعة أو الخدمة مثال: سقف السعر

–Price floor: a legal minimum on the price of a good or service Example: minimum wage

– الحد األدنى لألجور: حد أدنى قانوني على سعر السلعة أو الخدمة مثال: أرض السعر

–

• Taxes –The govt can make buyers or sellers pay a specific amount on each unit. – .يمكن للحكومة أن تجعل المشترين أو البائعين يدفعون مبلغًا محدًدا في كل وحدة

We will use the supply/demand model to see

how each policy affects the market outcome (the price buyers pay, the price sellers receive, and eq’m

quantity).

السعر الذي يدفعه المشترون ، ويتلقى )الطلب لنرى كيف تؤثر كل سياسة على نتائج السوق / سوف نستخدم نموذج العرض (.البائعون الثمن ، وكمية التوازن

EXAMPLE 1: The Market for Apartmentsمهم

Eq’m w/o price

controls

Q D

S Rental price of

apts

$800

300

Quantity of apts

How Price Ceilings Affect Market Outcomes كيف تؤثر سقوف السعر على نتائج السوق

A price ceiling above the eq’m price is not binding—

has no effect on the market outcome.

سقف السعر فوق سعر -التوازن غير ملزم

ليس له أي تأثير على .نتائج السوق

Q D

$800

300

Price ceiling

$1000

How Price Ceilings Affect Market Outcomes

The eq’m price ($800) is above the ceiling and therefore illegal.

( دوالر 800)سعر التوازن فوق السقف وبالتالي غير

.قانوني

The ceiling is a binding constraint on the price, causes a shortage.

السقف هو قيد ملزم على .السعر ، يسبب نقصا

Q D

$800

Price ceiling

$500

250 400

shortage

How Price Ceilings Affect Market Outcomes

In the long run, supply and demand are more price-elastic.

So, the shortage is larger.

على المدى الطويل ، يكون العرض والطلب أكثر السعر .مرونة

.لذا ، فإن النقص أكبر

Q D

$800

150

Price ceiling

$500

450

shortage

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Shortages and Rationing العجز والتقنين

▪ With a shortage, sellers must ration the goods among buyers.

▪ .مع وجود نقص ، يجب على البائعين تقنين البضائع بين المشترين

▪ Some rationing mechanisms: (1) Long lines

(2( Discrimination according to sellers’ biases

▪ البائعينالتمييز وفقاً لتحيزات ( 2)الخطوط الطويلة ( 1: )بعض آليات الترشيد

▪ These mechanisms are often unfair, and inefficient: the goods do

not necessarily go to the buyers who value them most highly.

▪ فالسلع ال تذهب بالضرورة إلى المشترين الذين يقدرونها : وغالبا ما تكون هذه اآلليات غير عادلة وغير فعالة .بدرجة عالية

▪ In contrast, when prices are not controlled ,the rationing mechanism

is efficient (the goods go to the buyers that value them most highly) and impersonal (and thus fair).

▪ حيث تذهب البضائع إلى المشترين )وفي المقابل ، عندما ال يتم التحكم في األسعار ، تكون آلية التقنين فعالة (.وبالتالي عادلة)وغير شخصية ( الذين يقدرونها أعلى قيمة

EXAMPLE 2: The Market for Unskilled Labor سوق العمالة غير الماهرة

Eq’m w/o price

controls

L D

S Wage paid to

unskilled workers

$6.00

500

Quantity of unskilled workers

How Price Floors Affect Market Outcomes السعر على نتائج السوقؤثر ارضيات كيف ت

L D

$6.00

500

Price floor

$5.00

A price floor below the eq’m price is not binding – has no effect on the market outcome.

إن أرضية السعر التي تقل عن سعر التوازن

وليس لها -غير ملزمة أي تأثير على نتائج .السوق

How Price Floors Affect Market Outcomes

L D

$6.00

Price floor

$7.25

The eq’m wage ($6) is below the floor and therefore illegal.

The floor is a binding constraint on the wage, causes a surplus (i.e., unemployment).

هو أقل ( دوالرات 6)إن األجر المتوازن .فهو غير قانونيالحد األدنى وبالتالي من

ملزم على قيد ( الحد األدنى)إن األرضية أي )األجور ، مما يؤدي إلى وجود فائض

(.البطالة

400 550

labor

surplus

Min wage laws do not affect highly skilled workers.

They do affect teen workers.

Studies: A 10% increase in the min wage raises teen unemployment by 1–3%.

قوانين الحد األدنى لألجور ال تؤثر .على العمال ذوي المهارات العالية

.انهم يؤثرون على العمال المراهقين

٪ في الحد 10زيادة : الدراسات األدنى لألجور تزيد البطالة بين

.٪3-1المراهقين بنسبة

The Minimum Wage

L D

$6.00

Min. wage

$7.25

400 550

unemp-

loyment

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 1

Price controls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Determine effects of:

A. $90 price ceiling ( shortage)

B. $90 price floor( not binding )

C. $120 price floor ( surplus )

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 1

A. $90 price ceiling

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

The price

falls to $90.

Buyers

demand

120 rooms,

sellers supply

90, leaving a

shortage.

shortage = 30

Price ceiling

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 1

B. $90 price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Eq’m price is above the floor,

so floor is not

binding.

P = $100,

Q = 100 rooms. Price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 1

C. $120 price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

The price

rises to $120.

Buyers

demand

60 rooms,

sellers supply

120, causing a

surplus.

surplus = 60

Price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Evaluating Price Controlsتقييم ضوابط السعر

▪Recall one of the Ten Principles from Chapter 1:

Markets are usually a good way to organize

economic activity.

▪ .األسواق عادة ما تكون وسيلة جيدة لتنظيم النشاط االقتصادي

▪ Prices are the signals that guide the allocation of society’s resources. This allocation is altered when policymakers restrict prices.

▪ يتم تغيير هذا التخصيص عندما يقوم . األسعار هي اإلشارات التي توجه تخصيص موارد المجتمع .صناع السياسة بتقييد األسعار

▪ Price controls often intended to help the poor, but often hurt more than

help.

▪ .غالبًا ما كانت ضوابط األسعار تهدف إلى مساعدة الفقراء ، ولكنها غالباً ما تؤذي أكثر من المساعدة

Taxes

•The govt levies taxes on many goods & services to raise revenue to pay for national defense, public schools, etc.

تفرض الحكومة ضرائب على العديد من السلع والخدمات لزيادة العائدات لدفع تكاليف الدفاع • .الوطني والمدارس العامة ، إلخ

•The govt can make buyers or sellers pay the tax.

• .يمكن للحكومة أن تجعل المشترين أو البائعين يدفعون الضرائب

•The tax can be a % of the good’s price, or a specific amount for each unit sold.

• .سعر السلعة ، أو مبلغًا محدًدا لكل وحدة مباعةالضريبة نسبه من يمكن أن تكون

–For simplicity, we analyze per-unit taxes only.

– .من أجل البساطة ، نقوم بتحليل الضرائب لكل وحدة فقط

EXAMPLE 3: The Market for Pizza

Eq’m w/o tax

$10.00

500

$10.00

500

A Tax on Buyers

The price buyers pay is now $1.50 higher than the market price P.

P would have to fall by $1.50 to make buyers willing to buy same Q as before.

E.g., if P falls from $10.00 to $8.50, buyers still willing to purchase 500 pizzas.

Q D2

Effects of a $1.50 per unit tax on buyers

$8.50

Hence, a tax on buyers

shifts the D curve down

by the amount of the tax.

Tax

$10.00

500

A Tax on Buyers

Q D2

$11.00 PB =

$9.50 PS =

Tax

Effects of a $1.50 per unit tax on buyers

New eq’m:

Q = 450

Sellers

receive

PS = $9.50

Buyers pay

PB = $11.00

Difference

between them

= $1.50 = tax 450

450

The Incidence of a Tax: حدوث الضريبه

how the burden of a tax is shared among market participantsكيف يتم تقاسم عبء الضريبة بين المشاركين في السوق

$10.00

500

$11.00 PB =

$9.50 PS =

Tax

In our example,

buyers pay $1.00 more,

sellers get

$0.50 less.

A Tax on Sellers

$10.00

500

Effects of a $1.50 per unit tax on sellers

The tax effectively raises sellers’ costs by $1.50 per pizza.

Sellers will supply 500 pizzas

only if P rises to $11.50, to compensate for

this cost increase.

دوالر لكل 1.50ترفع الضريبة بشكل فعال تكاليف البائعين بمقدار .بيتزا

دوالر 11.50بيتزا فقط إذا ارتفع السعر إلى 500سيزود البائعون .، للتعويض عن هذه الزيادة في التكلفة

$11.50

Hence, a tax on sellers shifts the

S curve up by the amount of the tax. ومن ثم ، فإن فرض ضريبة على البائعين يغير منحنى العرض بمقدار الضريبة

Tax

A Tax on Sellers

$10.00

500

450

$11.00 PB =

$9.50 PS =

Tax

Effects of a $1.50 per unit tax on sellers

New eq’m:

Q = 450

Buyers pay

PB = $11.00

Sellers

receive

PS = $9.50

Difference

between them

= $1.50 = tax

The Outcome Is the Same in Both Cases!

What matters is this:

A tax drives a wedge between the price buyers pay and the price sellers receive.

:ما يهم هو

تدفع الضريبة إسفينًا بين السعر الذي يدفعه المشترون ويتلقى البائعون السعر

$10.00

500 450

$9.50

$11.00 PB =

PS =

Tax

The effects on P and Q, and the tax incidence are the same whether the

tax is imposed on buyers or sellers! اآلثار على السعر والكمية ، وحدوث الضريبة هي نفسها سواء فرضت الضريبة على المشترين أو البائعين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 2

Effects of a tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Suppose govt

imposes a tax

on buyers of

$30 per room.

Find new

Q, PB, PS,

and incidence

of tax.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Q = 80

PB = $110

PS = $80

Incidence

buyers: $10

sellers: $20

Tax

PB =

PS =

Elasticity and Tax Incidence المرونة والضرائب

CASE 1: Supply is more elastic than demand

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Price if no tax

It’s easier for sellers than buyers

to leave the market.

So buyers bear most of the burden of the

tax.

من األسهل للبائعين أكثر من .المشترين مغادرة السوق

لذلك يتحمل المشترون معظم .عبء الضريبة

Elasticity and Tax Incidence

CASE 2: Demand is more elastic than supply

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Price if no tax

It’s easier for buyers than sellers to leave

the market.

Sellers bear most of the burden of

the tax.

يسهل على المشترين من .البائعين مغادرة السوق

يتحمل البائعون معظم عبء .الضريبة

CASE STUDY: Who Pays the Luxury Tax?

• 1990: Congress adopted a luxury tax on yachts, private airplanes, furs, expensive cars, etc.

• Goal: raise revenue from those who could most easily afford to pay—wealthy consumers.

• But who really pays this tax?

CASE STUDY: Who Pays the Luxury Tax?

The market for yachts

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Demand is price-elastic.

In the short run, supply is inelastic.

Hence, companies that build yachts pay most of the tax.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 3

The 2011 payroll tax cut 2011تخفيض ضريبة الرواتب

▪ Prior to 2011, the Social Security payroll tax was 6.2% taken from workers’ pay and 6.2% paid by employers (total 12.4%).

▪ ٪ تدفع 6.2٪ من أجور العمال و 6.2، بلغت ضريبة الرواتب على الضمان االجتماعي 2011قبل عام (.٪ 12.4ما مجموعه )من قبل أرباب العمل

▪ The Tax Relief Act (2010( reduces the worker’s portion from 6.2% to 4.2% (for 2011 only(, but leaves the employer’s portion at 6.2%.

▪ ، ولكنه ( فقط 2011لعام )٪ 4.2٪ إلى 6.2حصة العامل من ( 2010)ويخفض قانون تخفيف الضرائب .٪6.2يترك حصة صاحب العمل عند

QUESTION:

Will the typical worker’s take-home pay rise by exactly 2%, more than 2%, or less than 2%? Do any elasticities affect your answer?

Explain. ؟ هل 2٪ أو أقل من 2٪ أو أكثر من 2هل سيرتفع أجر العامل النموذجي إلى المنزل بنسبة٪ اشرحتؤثر أي مرونة على إجابتك؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 3

Answers

▪ As long as labor supply and labor demand both have price elasticity

> 0, the tax cut will be shared by workers and employers, i.e., workers’ take-home pay will rise less than 2%.

▪ ، فإن حصة العمال وأرباب العمل < 0وطالما أن الطلب على العمالة واليد العاملة لهما المرونة السعرية .في المائة 2سوف تتسبب في تخفيض الضرائب ، أي أن رواتب العاملين في المنازل سترتفع بنسبة أقل من

▪ The answer does NOT depend on whether labor demand is more or

less elastic than labor supply.

▪ .ال تعتمد اإلجابة على ما إذا كان الطلب على العمالة أكثر مرونة أو أقل من عرض العمالة

FOLLOW-UP QUESTION: Who gets the bigger share of this tax cut, workers or employers?

How do elasticities determine the answer?

الذي يحصل على الحصة األكبر من هذا التخفيض الضريبي ، العمال أو أرباب العمل؟ كيف تحدد المرونة من اإلجابة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 3

Answers to follow-up question

▪ If labor demand is more elastic than labor supply,

workers get more of the tax cut than employers.

▪ إذا كان الطلب على العمالة أكثر مرونة من عرض العمالة ، فإن العمال يحصلون على المزيد من .التخفيضات الضريبية مقارنة بأرباب العمل

▪ If labor demand is less elastic than labor supply,

employers get the larger share of the tax cut.

▪ إذا كان الطلب على العمالة أقل مرونة من عرض العمالة ، يحصل أصحاب العمل على حصة .أكبر من خفض الضرائب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION: Government Policies and the Allocation of Resources

•Each of the policies in this chapter affects the allocation of society’s resources.

–Example 1: A tax on pizza reduces eq’m Q.

With less production of pizza, resources (workers, ovens, cheese) will become available to

other industries.

–Example 2: A binding minimum wage causes

a surplus of workers, a waste of resources.

•So, it’s important for policymakers to apply such policies very carefully.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S U M M A R Y

•A price ceiling is a legal maximum on the price of a good. An

example is rent control. If the price ceiling is below the eq’m price, it is binding and causes a shortage.

• إذا . مثال على ذلك هو التحكم في اإليجارات. سقف السعر هو الحد األقصى القانوني لسعر السلعة .كان سقف السعر أقل من سعر التوازن ، فهو ملزم ويسبب نقًصا

•A price floor is a legal minimum on the price of a good. An example

is the minimum wage. If the price floor is above the eq’m price, it is binding

and causes a surplus. The labor surplus caused by the minimum

wage is unemployment.

• . مثال على ذلك هو الحد األدنى لألجور. إن أرضية السعر هي الحد األدنى القانوني لسعر السلعة فائض العمالة الناتج عن . إذا كان سعر األرضية أعلى من سعر التوازن ، فهو ملزم ويسبب فائضاً

.الحد األدنى لألجور هو البطالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S U M M A R Y

•A tax on a good places a wedge between the price buyers pay and

the price sellers receive, and causes the eq’m quantity to fall, whether the tax is imposed on buyers or sellers.

• إسفين بين السعر الذي يدفعه المشترون وتسلمه بائعي األسعار ، -فرض ضريبة على أماكن جيدة .ويتسبب في انخفاض كمية التوازن ، سواء كانت الضريبة مفروضة على المشترين أو البائعين

•The incidence of a tax is the division of the burden of the tax

between buyers and sellers, and does not depend on whether the tax is imposed on buyers or sellers.

• إن معدل الضريبة هو تقسيم عبء الضريبة بين المشترين والبائعين ، وال يعتمد على ما إذا كانت .الضريبة مفروضة على المشترين أو البائعين

•The incidence of the tax depends on the price elasticities of supply

and demand.

• .يعتمد معدل الضريبة على المرونة السعرية للعرض والطلب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What is consumer surplus? How is it related to

the demand curve?

• What is producer surplus? How is it related to

the supply curve?

• Do markets produce a desirable allocation of

resources? Or could the market outcome be

improved upon?

Welfare Economics

▪ Recall, the allocation of resources refers to: ▪ :تذكير، بتخصيص الموارد يشير إلى

▪ how much of each good is produced ▪ يتم إنتاج كم من كل منتج

▪ which producers produce it ▪ من هم المنتجين الذين ينتجونها

▪ which consumers consume it ▪ المستهلكين التي تستهلك

▪ Welfare economics studies how the allocation of resources affects

economic well-being.

▪ First, we look at the well-being of consumers.

▪ أوالً، أننا ننظر في رفاه . دراسة كيف يؤثر على تخصيص الموارد للرفاهية االقتصادية: رفاهية االقتصاد المستهلكين

Willingness to Pay (WTP) A buyer’s willingness to pay for a good is the maximum amount the buyer will

pay for that good.

WTP measures how much the buyer values the good.

تدابيرالرغبة تقيس تقييم . استعداد المشتري لدفع ثمن جيد هو الحد األقصى للمبلغ سوف يدفعه المشتري لتلك السلعه المشتري لتلك السلعه

name WTP

Anthony $250

Chad 175

Flea 300

John 125

Example:

4 buyers’ WTP for an iPod

WTP and the Demand Curve

Q: If price of iPod is $200, who will buy an iPod, and

what is quantity demanded?

A: Anthony & Flea will buy an iPod,

Chad & John will not.

Hence, Qd = 2

when P = $200.

name WTP

Anthony $250

Chad 175

Flea 300

John 125

WTP and the Demand Curve

Derive the

demand

schedule:

4 John, Chad,

Anthony, Flea 0 – 125

3 Chad, Anthony,

Flea 126 – 175

2 Anthony, Flea 176 – 250

1 Flea 251 – 300

0 nobody $301 & up

Qd who buys P (price

of iPod)

name WTP

Anthony $250

Chad 175

Flea 300

John 125

WTP and the Demand Curve

P Qd

$301 & up 0

251 – 300 1

176 – 250 2

126 – 175 3

0 – 125 4

About the Staircase Shape…

This D curve looks like a staircase with 4 steps – one per buyer.

If there were a huge # of buyers, as in a competitive market,

there would be a huge # of very tiny steps,

and it would look more like a smooth curve.

WTP and the Demand Curve

At any Q, the height of

the D curve is

the WTP of the marginal buyer,

the buyer who

would leave the

market if P were any higher.

Flea’s WTP

Anthony’s WTP

Chad’s WTP John’s WTP

Consumer Surplus (CS) Consumer surplus is the amount a buyer is willing to pay minus the amount the buyer

actually pays:

:فائض المستهلك هو المبلغ الذي يرغب المشتري دفعه ناقص المبلغ الذي يدفعه المشتري فعال

CS = WTP – P

name WTP

Anthony $250

Chad 175

Flea 300

John 125

Suppose P = $260.

Flea’s CS = $300 – 260 = $40.

The others get no CS because they do not buy an iPod at this price.

Total CS = $40.

CS and the Demand Curve P

Flea’s WTP P = $260

Flea’s CS = $300 – 260 = $40

Total CS = $40

CS and the Demand Curve P

Flea’s WTP

Anthony’s WTP

Instead, suppose P = $220

Flea’s CS = $300 – 220 = $80

Anthony’s CS = $250 – 220 = $30

Total CS = $110

CS and the Demand Curve P

The lesson:

Total CS equals

the area under

the demand curve

above the price,

from 0 to Q.

CS with Lots of Buyers & a Smooth D Curve

The demand for shoes

1000s of pairs of shoes

Price per pair

At Q = 5(thousand), the marginal buyer

is willing to pay $50

for pair of shoes.

Suppose P = $30.

Then his consumer

surplus = $20.

CS with Lots of Buyers & a Smooth D Curve

The demand for shoes

CS is the area b/w P and the D curve,

from 0 to Q.

Recall: area of a triangle equals

½ x base x height

Height =

$60 – 30 = $30.

So,

CS = ½ x 15 x $30

= $225.

How a Higher Price Reduces CS

If P rises to $40,

CS = ½ x 10 x $20

= $100.

Two reasons for the

fall in CS.

1. Fall in CS due to buyers leaving market

2. Fall in CS due to remaining buyers paying higher P

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

demand curve

A. Find marginal buyer’s WTP at Q = 10.

B. Find CS for P = $30.

Suppose P falls to $20. How much will CS increase due to… C. buyers entering

the market

D. existing buyers paying lower price

ACTIVE LEARNING 1

Consumer surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

demand curve

A. At Q = 10, marginal buyer’s WTP is $30.

B. CS = ½ x 10 x $10 = $50

P falls to $20.

C. CS for the additional buyers = ½ x 10 x $10 = $50

D. Increase in CS on initial 10 units = 10 x $10 = $100

Cost and the Supply Curve

name cost

Jack $10

Janet 20

Chrissy 35

A seller will produce and sell

the good/service only if the

price exceeds his or her cost.

Hence, cost is a measure of

willingness to sell.

▪ Cost is the value of everything a seller must give up to produce a good (i.e., opportunity cost).

• التكلفة هي قيمة كل شيء يجب على البائع التخلي عنه إلنتاج سلعة ▪ (.أي تكلفة الفرصة البديلة)

▪ Includes cost of all resources used to produce good, including value of the seller’s time.

▪ .وتشمل تكلفة جميع الموارد المستخدمة إلنتاج السلعه، بما في ذلك قيمة الوقت للبائع

▪ Example: Costs of 3 sellers in the lawn-cutting business.

Cost and the Supply Curve

3 35 & up

2 20 – 34

1 10 – 19

0 $0 – 9

Qs P Derive the supply schedule

from the cost data:

name cost

Jack $10

Janet 20

Chrissy 35

Cost and the Supply Curve

P Qs

$0 – 9 0

10 – 19 1

20 – 34 2

35 & up 3

Cost and the Supply Curve

At each Q, the height of

the S curve

is the cost of the marginal seller,

the seller who would leave

the market if

the price were any lower. هامشية البائع، البائع الذي سيترك السوق

.إذا كان السعر أقل

Chrissy’s cost

Janet’s cost

Jack’s cost

Producer Surplus

Producer surplus (PS): the

amount a seller

is paid for a good

minus the seller’s cost

)فائض المنتج PS): يتم دفع مبلغ البائع مقابل سلعة ما ، مطروًحا منه تكلفة البائع

PS = P – cost

Producer Surplus and the S Curve

PS = P – cost

Suppose P = $25.

Jack’s PS = $15

Janet’s PS = $5

Chrissy’s PS = $0

Total PS = $20

Janet’s cost

Jack’s cost

Total PS equals the

area above the supply

curve under the price,

from 0 to Q.

Chrissy’s cost

PS with Lots of Sellers & a Smooth S Curve

The supply of shoes

1000s of pairs of shoes

Price per pair

Suppose P = $40.

At Q = 15(thousand),

the marginal seller’s cost is $30,

and her producer

surplus is $10.

PS with Lots of Sellers & a Smooth S Curve

The supply of shoes

PS is the area b/w P and the S curve, from 0 to Q.

The height of this

triangle is $40 – 15 = $25.

So,

PS = ½ x b x h

= ½ x 25 x $25 = $312.50

How a Lower Price Reduces PS

If P falls to $30,

PS = ½ x 15 x $15 = $112.50

Two reasons for

the fall in PS.

1. Fall in PS due to sellers leaving market

2. Fall in PS due to remaining sellers getting lower P

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Producer surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

supply curve

A. Find marginal seller’s cost at Q = 10.

B. Find total PS for P = $20.

Suppose P rises to $30. Find the increase in PS due to:

C. selling 5 additional units

D. getting a higher price on the initial 10 units

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

supply curve

A. At Q = 10, marginal cost = $20

B. PS = ½ x 10 x $20 = $100

P rises to $30.

C. PS on additional units = ½ x 5 x $10 = $25

D. Increase in PS on initial 10 units = 10 x $10 = $100

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS, PS, and Total Surplus

CS = (value to buyers) – (amount paid by buyers)

= buyers’ gains from participating in the market

PS = (amount received by sellers) – (cost to sellers)

= sellers’ gains from participating in the market

Total surplus = CS + PS

= total gains from trade in a market

= (value to buyers) – (cost to sellers)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market’s Allocation of Resources

▪ In a market economy, the allocation of resources

is decentralized, determined by the interactions

of many self-interested buyers and sellers.

▪ في اقتصاد السوق ، فإن تخصيص الموارد؟ هو المركزي ، تحدده التفاعالت بين العديد من المشترين والبائعين المهتمين .بالنفس

▪ Is the market’s allocation of resources desirable? Or would a different allocation of resources make

society better off?

▪ To answer this, we use total surplus as a measure

of society’s well-being, and we consider whether

the market’s allocation is efficient.

(Policymakers also care about equality, though our

focus here is on efficiency.)

Efficiency

An allocation of resources is efficient if it maximizes total surplus. Efficiency

means: الكفاءة تعني. تخصيص الموارد فعال إذا كان يزيد الفائض الكلي

▪ The goods are consumed by the buyers who value them most highly. – كبيريتم استهالك البضائع من قبل المشترين الذين يقدرونها بشكل

▪ The goods are produced by the producers with the lowest costs. – التكاليفيتم إنتاج السلع من قبل المنتجين بأقل

▪ Raising or lowering the quantity of a good would not increase total surplus. – الفائضإن رفع أو تخفيض كمية السلعة لن يؤدي إلى زيادة إجمالي

= (value to buyers) – (cost to sellers) Total

surplus

Evaluating the Market Equilibrium

Market eq’m: P = $30

Q = 15,000

Total surplus = CS + PS

Is the market eq’m efficient?

Which Buyers Consume the Good?

Every buyer whose WTP is

≥ $30 will buy.

Every buyer

whose WTP is < $30 will not.

So, the buyers who value

the good most highly are the

ones who consume it.

المشترون الذين يقدرون القيمة الجيدة هم الذين يستهلكونها

Which Sellers Produce the Good?

Every seller whose cost is ≤ $30 will

produce the good.

Every seller whose cost is > $30 will

not.

So, the sellers with the

lowest cost produce the

good.

.السلعهالباعة بأقل تكلفة ينتجون

Does Eq’m Q Maximize Total Surplus?

At Q = 20,

cost of producing

the marginal unit

is $35

value to consumers

of the marginal unit

is only $20

Hence, can increase

total surplus

by reducing Q.

This is true at any Q

greater than 15.

Does Eq’m Q Maximize Total Surplus?

At Q = 10,

cost of producing

the marginal unit

is $25

value to consumers

of the marginal unit

is $40

Hence, can increase

total surplus

by increasing Q.

This is true at any Q

less than 15.

Does Eq’m Q Maximize Total Surplus?

The market

eq’m quantity maximizes

total surplus:

At any other quantity,

can increase

total surplus by moving

toward

the market eq’m quantity.

تزيد كمية توازن السوق من الفائض في أي كمية أخرى ، يمكن : الكلي

زيادة الفائض الكلي عن طريق التحرك .نحو كمية توازن السوق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Free Market vs. Central Planning

▪ Suppose resources were allocated not by the

market, but by a central planner who cares about

society’s well-being.

▪ To allocate resources efficiently and maximize total

surplus, the planner would need to know every

seller’s cost and every buyer’s WTP for every good in the entire economy.

▪ This is impossible, and why centrally-planned

economies are never very efficient.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ This chapter used welfare economics to

demonstrate one of the Ten Principles:

Markets are usually a good way to

organize economic activity.

▪ Important note:

We derived these lessons assuming

perfectly competitive markets.

▪ In other conditions we will study in later

chapters, the market may fail to allocate

resources efficiently…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ Such market failures occur when:

▪ a buyer or seller has market power—the ability to

affect the market price.

▪ transactions have side effects, called externalities, that affect bystanders. (example: pollution)

▪ We’ll use welfare economics to see how public policy may improve on the market outcome in such cases.

▪ Despite the possibility of market failure, the analysis in this chapter applies in many markets, and the

invisible hand remains extremely important.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The height of the D curve reflects the value of the

good to buyers—their willingness to pay for it.

• Consumer surplus is the difference between what

buyers are willing to pay for a good and what they

actually pay.

• On the graph, consumer surplus is the area

between P and the D curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The height of the S curve is sellers’ cost of producing the good. Sellers are willing to sell if

the price they get is at least as high as their cost.

• Producer surplus is the difference between what

sellers receive for a good and their cost of

producing it.

• On the graph, producer surplus is the area

between P and the S curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• To measure society’s well-being, we use

total surplus, the sum of consumer and producer

surplus.

• Efficiency means that total surplus is maximized,

that the goods are produced by sellers with

lowest cost, and that they are consumed by

buyers who most value them.

• Under perfect competition, the market outcome

is efficient. Altering it would reduce total surplus.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How does a tax affect consumer surplus,

producer surplus, and total surplus?

• What is the deadweight loss of a tax?

• What factors determine the size of this

deadweight loss?

• How does tax revenue depend on the size of the

tax?

Review from Chapter 6

▪ A tax

▪ drives a wedge between the price buyers pay

and the price sellers receive.

▪ raises the price buyers pay and lowers the price

sellers receive.

▪ reduces the quantity bought & sold.

▪ These effects are the same whether the tax is

imposed on buyers or sellers, so we do not

make this distinction in this chapter.

The Effects of a Tax P

Eq’m with no tax: Price = PE

Quantity = QE

Eq’m with tax = $T per unit:

Sellers receive PS

Quantity = QT

Buyers pay PB

Size of tax = $T

The Effects of a Tax P

Revenue from tax: $T x QT

QE QT

Size of tax = $T

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax

▪ Next, we apply welfare economics to measure the gains and losses

from a tax. ▪ .بعد ذلك ، نطبق اقتصاديات الرفاهية لقياس المكاسب والخسائر من الضريبة

▪ We determine consumer surplus (CS), producer surplus (PS), tax revenue, and total surplus with and without the tax.

▪ .نحدد فائض المستهلك وفائض المنتج واإليرادات الضريبية والفائض اإلجمالي مع أو بدون الضريبة

▪ Tax revenue can fund beneficial services (e.g., education, roads, police),

so we include it in total surplus.

▪ ، لذلك ( على سبيل المثال ، التعليم ، الطرق ، الشرطة)يمكن لإليرادات الضريبية تمويل الخدمات المفيدة .نحن نقوم بإدراجها في إجمالي الفائض

The Effects of a Tax P

Without a tax,

QE QT

B C

D E

CS = A + B + C

PS = D + E + F

Tax revenue = 0

Total surplus = CS + PS

= A + B + C

+ D + E + F

The Effects of a Tax P

QE QT

B C

D E

CS = A

PS = F

Tax revenue = B + D

Total surplus = A + B

+ D + F

With the tax,

The tax reduces total surplus by

C + E

The Effects of a Tax P

QE QT

B C

D E

C + E is called the

deadweight loss (DWL) of the tax, the fall in total

surplus that

results from a market distortion, such as a tax.

تسمى سي و اي خسارة المكاسب القصوى للضريبه وهبوط إجمالي الفائض الناتج عن .تشويه السوق ، مثل الضريبة

About the Deadweight Loss P

QE QT

Because of the tax, the units

between

QT and QE are not sold.

The value of these units to

buyers is greater than the cost

of producing them,

so the tax prevents some

mutually beneficial trades.

بينبسبب الضريبة ، ال يتم بيع الوحدات

Qt & Qe

قيمة هذه الوحدات للمشترين أكبر من تكلفة ،إنتاجها

بحيث تمنع الضريبة بعض الصفقات ذات .المنفعة المتبادلة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1مهم جدا

Analysis of tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Compute

CS, PS, and

total surplus

without a tax.

B. If $100 tax

per ticket,

compute

CS, PS,

tax revenue,

total surplus,

and DWL.

The market for airplane tickets

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers to A

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

= ½ x $200 x 100

= $10,000

Total surplus

= $10,000 + $10,000

= $20,000

= ½ x $200 x 100

= $10,000

P =

The market for airplane tickets

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers to B

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

= ½ x $150 x 75

= $5,625

Total surplus = $18,750

PS = $5,625

Tax revenue

= $100 x 75

= $7,500

DWL = $1,250

PS =

PB =

A $100 tax on airplane tickets

What Determines the Size of the DWL? ما الذي يحدد حجم الخسارة النهائية؟

▪ Which goods or services should govt tax

to raise the revenue it needs?

▪ One answer: those with the smallest DWL.

▪ When is the DWL small vs. large?

Turns out it depends on the price elasticities

of supply and demand.

▪ Recall: The price elasticity of demand (or supply) measures how much QD

(or QS) changes when P changes.

• .عندما يتغير السعر( أو الكمية)مدى تغير الطلب على الكمية ( أو العرض)تقيس مرونة الطلب

When supply

is inelastic,

it’s harder for firms to leave the market when the tax

reduces PS.

So, the tax only reduces Q

a little,

and DWL is small.

عندما يكون العرض غير مرن ،

يصعب على الشركات مغادرة السوق الضريبه بي اسعندما تخفض

لذا ، فإن الضريبة فقط تخفض الكمية .قليالً ، وفقدان الوزن النهائي صغير

DWL and the Elasticity of Supply

Size of tax

DWL and the Elasticity of Supply

Size of tax

The more elastic is supply,

the easier for firms

to leave the market when the

tax reduces PS,

the greater Q falls below the

surplus-maximizing quantity,

the greater the DWL.

كلما زادت مرونة العرض ،

األسهل للشركات أن تغادر السوق عندما الضريبه بي استخفض

كلما انخفضت الكمية إلى أقل من كمية الفائض إلى أقصى حد ،

فإن فقدان المكاسب أكبر

DWL and the Elasticity of Demand

Size of tax

When demand

is inelastic,

it’s harder for consumers to leave the market when

the tax raises PB.

So, the tax only reduces

Q a little,

and DWL is small.

عندما يكون الطلب غير مرن ،

يصعب على المستهلكين مغادرة السوق من البي بيعندما تزيد الضرائب

، لذا ، فإن الضريبة فقط تقلل الكمية قليالً وخسارة المكاسب تكون صغيره

DWL and the Elasticity of Demand

Size of tax

The more elastic is demand,

the easier for buyers to

leave the market when the

tax increases PB,

the more Q falls below the

surplus-maximizing quantity,

and the greater the DWL.

أكثر مرونة هو الطلب ،

األسهل للمشترين لمغادرة السوق عندما بي بيتزيد الضريبة

كلما انخفضت الكمية إلى أقل من كمية ، كلما زادت الفائض إلى أقصى حد

خسارة المكاسب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Elasticity and the DWL of a tax

Would the DWL of a tax be larger if the

tax were on: DWLهل سيكون مبلغ

:الضريبي أكبر إذا كانت الضريبة

a. Breakfast cereal or sunscreen?

A. ؟حبوب اإلفطار أو واقية من الشمس

B. Hotel rooms in the short run or hotel rooms in

the long run? B. ؟غرف الفنادق في المدى القصير أو غرف الفنادق على المدى الطويل

C. Groceries or meals at fancy restaurants? C. البقالة أو وجبات الطعام في المطاعم الفاخرة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

A. Breakfast cereal or sunscreen

From Chapter 5:

Breakfast cereal has more close substitutes than sunscreen, so

demand for breakfast cereal is more price-elastic than demand for sunscreen.

So, a tax on breakfast cereal would cause a larger DWL than a tax

on sunscreen.

تحتوي حبوب اإلفطار على بدائل أكثر قربًا من مستحضرات الحماية من الشمس ، لذلك فإن الطلب على حبوب

.يكون أكثر مرونة من السعر المطلوب من الشمساإلفطار

على الضريبة أكبر من فقدان مكاسب لذا ، فإن فرض ضريبة على حبوب اإلفطار من شأنه أن يتسبب في وجود واقي الشمس

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

B. Hotel rooms in the short run or long run

From Chapter 5:

The price elasticities of demand and supply

for hotel rooms are larger in the long run than in the short run.

So, a tax on hotel rooms would cause a larger DWL in the long run

than in the short run.

.تعتبر المرونة السعرية للطلب والعرض لغرف الفنادق أكبر على المدى الطويل من المدى القصير

لذا ، فإن فرض ضريبة على غرف الفنادق قد يتسبب في وجود فقدان مكاسب اكبر على المدى الطويل .من المدى القصير

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

C. Groceries or meals at fancy restaurants

From Chapter 5:

Groceries are more of a necessity and therefore less price-elastic

than meals at fancy restaurants.

So, a tax on restaurant meals would cause a larger DWL than a tax

on groceries.

.البقالة هي أكثر من ضرورة ، وبالتالي أقل مرونة السعر من وجبات الطعام في المطاعم الفاخرة

من الضريبة مكاسب أكبر لذا ، فإن فرض ضريبة على وجبات المطاعم قد يتسبب في وجود فقدان .المفروضة على محالت البقالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Discussion question

▪ The government must raise tax revenue to pay

for schools, police, etc. To do this, it can either

tax groceries or meals at fancy restaurants.

▪ Which should it tax?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be? يجب أن تكون الحكومة كبيرة؟كيف

▪ A bigger government provides more services, but requires higher

taxes, which cause DWLs. ▪ أعلى مما يؤدي الى فقدان المكاسب األكبر توفر خدمات اكثر ولكنها تتطلب ضرائب الحكومه

▪ The larger the DWL from taxation, the greater the argument for

smaller government.

▪ زادت حجة الحكومه األصغر حجما, كلما زاد حجم الضريبه من الضرائب

▪ The tax on labor income is especially important; it’s the biggest source of govt revenue.

▪ أنها اكبر مصدر اليرادات الحكومه, تكتسب الضريبه على دخل العماله أهمية خاصه

▪ For the typical worker, the marginal tax rate (the tax on the last dollar

of earnings) is about 40%.

▪ حولي ( الضريبه على اخر دوالر من األرباح)فإن معدل الضريبه الحديه, بالنسبه للعامل النموذجي 40%

▪ How big is the DWL from this tax? It depends on elasticity ماهو حجم خسارة المكاسب ذلك يعتمد على المرونه, من الضريبه

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be?

▪ If labor supply is inelastic, then this DWL is

small.

▪ فقدان حجم المكاسب صغيرإذا كان عرض العمل غير مرن ، فإن

▪ Some economists believe labor supply is

inelastic, arguing that most workers work

full-time regardless of the wage.

▪ يعتقد بعض االقتصاديين أن العرض العمالي غير مرن ، بحجة أن .معظم العمال يعملون بدوام كامل بغض النظر عن األجر

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be?

Other economists believe labor taxes are highly distorting because

some groups of workers have elastic supply and can respond to incentives:

ويعتقد اقتصاديون آخرون أن ضرائب العمل مشوهة للغاية ألن بعض مجموعات العمال لديها إمدادات مرنة :ويمكنها االستجابة للحوافز

▪ Many workers can adjust their hours, e.g., by working overtime.

▪ .يمكن للعديد من العمال تعديل ساعات عملهم ، على سبيل المثال ، عن طريق العمل اإلضافي

▪ Many families have a 2nd earner with discretion over whether and

how much to work.

▪ .تمتلك العديد من العائالت ربًحا ثانيًا حسب تقديرها ومدى عملها

▪ Many elderly choose when to retire based on the wage they earn. ▪ يختار العديد من كبار السن وقت التقاعد بناًء على األجر الذي يكسبونه

▪ Some people work in the “underground economy” to evade high taxes. للتهرب من الضرائب المرتفعة" االقتصاد السري"يعمل بعض الناس في

The Effects of Changing the Size of the Tax آثار تغيير حجم الضريبة

▪ Policymakers often change taxes, raising some and

lowering others.

• غالباً ما يغير صانعو السياسة الضرائب ويثيرون البعض ويخفضون اآلخرين

▪ What happens to DWL and tax revenue when

taxes change? We explore this next…. ▪ ماذا يحدث لفقدان حجم المكاسب وايراد الضرائب عند تغيير

الضرائب؟ نكتشفها الحقا

Q2 Q1

DWL and the Size of the Tax

causes the DWL to

more than double. اساب فقد حجم المكاسب الى اكثر من الضعب

Doubling the tax

مضاعفة الضريبه

2T T

Initially, the tax is T per

unit.

في البدايه في الضريبه هي تي لكل وحده

initial DWL

new DWL

DWL and the Size of the Tax

3T T

causes the DWL to

more than triple. اسباب فقد حجم المكاسب الى اكثر من

اضعاف 3

Tripling the tax

مرات 3مضاعفة الضريبه

Initially, the tax is T per unit.

initial DWL

new DWL

DWL and the Size of the Tax

DWL

Tax size

Summary

When a tax increases,

DWL rises even more.

عندما تزيد الضرائب ترتفع فقدان حجم المكاسب اكثر

Implication

When tax rates are low, raising

them doesn’t cause much harm, and lowering them doesn’t bring much benefit.

When tax rates are high, raising

them is very harmful, and

cutting them is very beneficial.

عندما تكون معدالت الضرائب منخفضة ، فإن رفعها ال يسبب الكثير من الضرر ، وال يؤدي

.خفضها إلى تحقيق فائدة كبيرة

عندما تكون المعدالت الضريبية عالية ، فإن .رفعها ضار للغاية ، وقطعها أمر مفيد للغاية

Revenue and the Size of the Tax

2T T

When the

tax is small, increasing it causes

tax revenue to rise.

عندما تكون الضريبة صغيرة ، فإن زيادة هذا األمر تؤدي .إلى ارتفاع عائدات الضرائب

Revenue and the Size of the Tax

3T 2T When the

tax is larger, increasing it causes

tax revenue to fall.

أكبر " الضريبة"عندما تكون ، فإن زيادة ذلك تؤدي إلى .انخفاض إيرادات الضرائب

The Laffer curve shows the

relationship

between the size of the tax

and tax revenue.

الفر العالقة يظهرمنحنى بين حجم الضريبة واإليرادات الضريبية

Revenue and the Size of the Tax

Tax size

Tax revenue

The Laffer curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A tax on a good reduces the welfare of buyers and sellers. This

welfare loss usually exceeds the revenue the tax raises for the govt. • هذه الخسارة االجتماعية تتجاوز عادة اإليرادات . الضريبة على سلعة ما تقلل من رفاهية المشترين والبائعين

التي ترفعها الضرائب على الحكومة

• The fall in total surplus (consumer surplus, producer surplus, and tax

revenue) is called the deadweight loss (DWL) of the tax.

• ( فائض المستهلك ، وفائض المنتج ، واإليرادات الضريبية)ويسمى االنخفاض في الفائض الكلي خسارة (المكاسب القصوى DWL). للضريبه

• A tax has a DWL because it causes consumers to buy less and producers

to sell less, thus shrinking the market below the level that maximizes total

surplus.

• حجم المكاسب ألنه يجعل المستهلكين يشترون أقل ويبيع المنتجون كميات أقل ، الضريبه لديها فقدان .وبالتالي يقلص السوق إلى ما دون المستوى الذي يزيد الفائض اإلجمالي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The price elasticities of demand and supply measure how much

buyers and sellers respond to price changes. Therefore, higher elasticities imply higher DWLs.

• لذلك ، . مرونة سعر العرض والطلب تقيس مدى استجابة المشترين والبائعين لتغيرات األسعار فقدان حجم مكاسب اعلى تعنيفإن المرونة العالية

• An increase in the size of a tax causes the DWL to rise even more.

• ارتفاع فقدان حجم مكاسب اكثرزيادة في حجم الضريبة يؤدي إلى

• An increase in the size of a tax causes revenue to rise at first, but

eventually revenue falls because the tax reduces the size of the

market.

• تؤدي الزيادة في حجم الضريبة إلى ارتفاع اإليرادات في البداية ، ولكن في نهاية المطاف تنخفض .اإليرادات ألن الضريبة تقلل من حجم السوق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What determines how much of a good a country

will import or export?

• Who benefits from trade? Who does trade

harm? Do the gains outweigh the losses?

• If policymakers restrict imports, who benefits?

Who is harmed? Do the gains from restricting

imports outweigh the losses?

• What are some common arguments for

restricting trade? Do they have merit?

Introduction

▪ Recall from Chapter 3: A country has a comparative advantage in a good if it produces the

good at lower opportunity cost than other countries.

Countries can gain from trade if each exports the goods in which it has a comparative advantage.

.يتمتع البلد بميزة نسبية في حالة جيدة إذا كان ينتج السلعة بتكلفة فرصة أقل من البلدان األخرى

.يمكن للبلدان أن تستفيد من التجارة إذا كان كل منها يصدر البضائع التي يتمتع فيها بميزة نسبية

▪ Now we apply the tools of welfare economics

to see where these gains come from and

who gets them.

• .اآلن نطبق أدوات اقتصاديات الرفاه لنرى من أين تأتي هذه المكاسب ومن الذي يحصل عليها

The World Price and Comparative Advantageمهم

▪ PW = the world price of a good, the price that prevails in world

markets

• العالميةالسعر الذي يسود في األسواق للسلعه، السعر العالمي

▪ PD = domestic price without trade

▪ If PD < PW,

▪ country has comparative advantage in the good

▪ under free trade, country exports the good

– السلعهبلد له ميزة نسبية في

– تصدر البالد السلعهفي ظل التجارة الحرة ،

▪ If PD > PW,

▪ country does not have comparative advantage

▪ under free trade, country imports the good

– ال تملك الدولة ميزة نسبية

– السلعهفي ظل التجارة الحرة ، تستورد البالد

The Small Economy Assumptionافتراض االقتصاد الصغير

▪ A small economy is a price taker in world markets: Its actions have

no effect on PW. • السعر العالميال تؤثر أفعاله على : االقتصاد الصغير هو من يقوم على األسعار في األسواق العالمية

▪ Not always true—especially for the U.S.—but simplifies the analysis without

changing its lessons.

• .ولكنه يبّسط التحليل دون تغيير دروسه —خاصةً بالنسبة للواليات المتحدة —ليس صحيًحا دائًما

• When a small economy engages in free trade, PW is the only relevant price: ، يكون السعر العالمي هو السعر الوحيد المناسبعندما ينخرط اقتصاد صغير في التجارة الحرة

▪ No seller would accept less than PW, sinceshe could sell the good

for PW in world markets.

– السلعة للسعر العالمي في األسواق العالميهيقبل أي بائع أقل من السعر العالمي حيث يمكنها بيع لن

▪ No buyer would pay more than PW, since he could buy the good

for PW in world markets. – لن يدفع أي مشتٍر أكثر من السعر العالمي ، ألنه يمكن أن يشتري سلعة مقابل األسعار العالمية في

األسواق العالمية

A Country That Exports Soybeans Without trade,

PD = $4

Q = 500

PW = $6

Under free trade,

▪ domestic

consumers

demand 300

▪ domestic producers

supply 750

▪ exports = 450

500 300

Soybeans

exports

750

A Country That Exports Soybeans Without trade,

CS = A + B

PS = C

Total surplus

= A + B + C

With trade,

CS = A

PS = B + C + D

Total surplus

= A + B + C + D

Soybeans

exports A

B D

C gains

from trade

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Without trade, PD = $3000, Q = 400

In world markets,

PW = $1500

Under free trade,

how many TVs

will the country import or export?

Identify CS, PS, and

total surplus without

trade, and with trade.

$1500

200

$3000

400 600

Plasma TVs

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1مهم

Analysis of trade

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Under free trade,

▪ domestic consumers

demand 600

▪ domestic

producers

supply 200

▪ imports = 400

$1500

200

$3000

600

Plasma TVs

imports

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Without trade,

CS = A

PS = B + C

Total surplus

= A + B + C

With trade,

CS = A + B + D

PS = C

Total surplus

= A + B + C + D

$1500

$3000

Plasma TVs

B D

gains from trade

imports

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

total surplus

producer surplus

consumer surplus

direction of trade

rises

falls

rises

imports

PD > PW

rises

falls

exports

PD < PW

Summary: The Welfare Effects of Trade

Whether a good is imported or exported, trade creates winners

and losers. But the gains exceed the losses.

.سواء تم استيراد السلعة أو تصديرها ، فإن التجارة تخلق الرابحين والخاسرين

.لكن المكاسب تتجاوز الخسائر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Other Benefits of International Trade فوائد أخرى للتجارة الدولية

▪ Consumers enjoy increased variety of goods. ▪ .يتمتع المستهلكون بتنوع متزايد في البضائع

▪ Producers sell to a larger market, may achieve lower costs by

producing on a larger scale.

▪ .قد يبيع المنتجون إلى سوق أكبر ، وقد يحققون تكاليف أقل من خالل اإلنتاج على نطاق أوسع

▪ Competition from abroad may reduce market power of domestic

firms, which would increase

total welfare.

▪ .قد تقلل المنافسة من الخارج من قوة السوق في الشركات المحلية ، مما يزيد من الرفاهية اإلجمالية

▪ Trade enhances the flow of ideas, facilitates the spread of technology around the world.

▪ .تعزز التجارة تدفق األفكار وتسهل انتشار التكنولوجيا حول العالم

Then Why All the Opposition to Trade? إذن لماذا كل المعارضة للتداول؟

▪ Recall one of the Ten Principles from Chapter 1:

Trade can make everyone better off.

▪ The winners from trade could compensate the losers and still be better off.

• .يمكن للفائزين من التجارة تعويض الخاسرين وما زالوا أفضل حاالً

▪ Yet, such compensation rarely occurs.

• .ومع ذلك ، نادرا ما يحدث مثل هذا التعويض

▪ The losses are often highly concentrated among a small group of people,

who feel them acutely.

• .غالبا ما تتركز الخسائر بشكل كبير بين مجموعة صغيرة من الناس ، الذين يشعرون بها بشكل حاد

The gains are often spread thinly over many people, who may not see how

trade benefits them.

.وكثيرا ما تنتشر المكاسب بشكل ضعيف على العديد من الناس ، الذين قد ال يرون كيف تفيدهم التجارة

▪ Hence, the losers have more incentive to organize and lobby for restrictions

on trade.

• .ومن ثم ، يكون لدى الخاسرين حافز أكبر للتنظيم والضغط من أجل فرض قيود على التجارة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Tariff: An Example of a Trade Restriction مثال على تقييد التجارة: التعرفة

▪ Tariff: a tax on imports ضريبه على الواردات

▪ Example: Cotton shirts

PW = $20

Tariff: T = $10/shirt Consumers must pay $30 for an imported shirt.

So, domestic producers can charge $30 per shirt.

▪ In general, the price facing domestic buyers & sellers equals (PW + T

▪ .دوالًرا للقميص المستورد 30يجب أن يدفع المستهلكون

▪ .دوالًرا أمريكيًا على كل قميص 30لذلك ، يمكن للمنتجين المحليين فرض

▪ Pw+T عام ، السعر الذي يواجه المشترين والبائعين المحليين يساويبشكل

$30

Analysis of a Tariff on Cotton Shirts

PW = $20

Free trade:

buyers demand 80

sellers supply 25

imports = 55

T = $10/shirt

price rises to $30

buyers demand 70

sellers supply 40

imports = 30

$20

Cotton shirts

40 70 80

imports imports

$30

Analysis of a Tariff on Cotton Shirts

Free trade

CS = A + B + C

+ D + E + F

PS = G

Total surplus = A + B

+ C + D + E + F + G

Tariff

CS = A + B

PS = C + G

Revenue = E

Total surplus = A + B

+ C + E + G

$20

Cotton shirts

D E

G F C

70 80

deadweight loss = D + F

$30

Analysis of a Tariff on Cotton Shirts

D = deadweight loss from the

overproduction

of shirts

F = deadweight loss

from the under-

consumption

of shirts

$20

Cotton shirts

D E

G F C

70 80

deadweight loss = D + F

Import Quotas: Another Way to Restrict Trade

▪ An import quota is a quantitative limit on imports of a good. • ةالسلعتمثل حصة االستيراد حًدا كميًا لواردات

▪ Mostly has the same effects as a tariff:

▪ Raises price, reduces quantity of imports.

▪ Reduces buyers’ welfare. ▪ Increases sellers’ welfare.

– :في الغالب لها نفس آثار التعريفة الجمركية

– .يرفع السعر ، ويقلل من كمية الواردات

– .يقلل من رفاهية المشترين

– .يزيد رفاهية البائعين

▪ A tariff creates revenue for the govt. A quota creates profits for the foreign

producers of the imported goods, who can sell them at higher price.

• تنتج الحصة أرباحاً للمنتجين األجانب للسلع المستوردة ، الذين يمكنهم بيعها . تعرفة تخلق إيرادات للحكومة أعلىبسعر

• Or, govt could auction licenses to import to capture this profit as revenue.

Usually it does not. أو يمكن للحكومة أن تحصل على تراخيص مزادات الستيراد هذه األرباح عادة ال يفعل ذلك. كإيرادات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Tradeالحجج لتقييد التجارة

1. The jobs argument

Trade destroys jobs in industries that compete with imports.

حجة الوظائف.

.التجارة تدمر الوظائف في الصناعات التي تتنافس مع الواردات

Economists’ response: Look at the data to see whether rising imports cause rising

unemployment…

:استجابة االقتصاديين

...انظر إلى البيانات لمعرفة ما إذا كان ارتفاع الواردات يسبب ارتفاع معدالت البطالة

U.S. Imports & Unemployment, Decade averages, 1961–2010

1 9 6 1 -

1 9 7 0

1 9 7 1 -

1 9 8 0

1 9 8 1 -

1 9 9 0

1 9 9 1 -

2 0 0 0

2 0 0 1 -

2 0 1 0

Imports (% of GDP)

Unemployment (% of labor force)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

1. The jobs argument

Trade destroys jobs in the industries that compete against imports.

.التجارة تدمر الوظائف في الصناعات التي تنافس الواردات

Economists’ response:

Total unemployment does not rise as imports rise, because job losses from imports are offset by job gains in export industries.

Even if all goods could be produced more cheaply abroad, the country need only have a comparative advantage to have a viable export industry and to gain from trade.

ال يرتفع إجمالي البطالة مع ارتفاع الواردات ، ألن خسائر الوظائف من الواردات يقابلها مكاسب في الوظائف في .صناعات التصدير

وحتى إذا أمكن إنتاج جميع السلع في الخارج بسعر أرخص ، فإن البلد ال يحتاج إال إلى ميزة نسبية لوجود صناعة .تصديرية قابلة لالستمرار وتحقيق مكاسب من التجارة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

2. The national security argument

An industry vital to national security should be protected from foreign competition, to prevent dependence on imports that could

be disrupted during wartime.

حجة األمن القومي

يجب حماية الصناعة الحيوية لألمن القومي من المنافسة األجنبية ، لمنع االعتماد على الواردات التي يمكن أن .تتعطل أثناء الحرب

Economists’ response: Fine, as long as we base policy on true security needs.

But producers may exaggerate their own importance to national

security to obtain protection from foreign competition.

.جيًدا ، طالما أننا نؤسس السياسة على احتياجات األمان الحقيقية

لكن المنتجين قد يبالغون في أهميتهم الخاصة لألمن القومي للحصول على الحماية من المنافسة .األجنبية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

3. The infant-industry argument

A new industry argues for temporary protection until it is mature and can compete with foreign firms.

حجة صناعة الرضع

.تدافع صناعة جديدة عن الحماية المؤقتة إلى أن تصبح ناضجة ويمكنها التنافس مع الشركات األجنبية

Economists’ response: Difficult for govt to determine which industries

will eventually be able to compete and whether benefits of establishing

these industries exceed cost to consumers of restricting imports.

Besides, if a firm will be profitable in the long run,

it should be willing to incur temporary losses.

:رد االقتصاديين

من الصعب على الحكومة تحديد الصناعات التي ستتمكن في النهاية من المنافسة وما إذا كانت فوائد إنشاء هذه .الصناعات تتجاوز التكلفة بالنسبة للمستهلكين المقيدين للواردات

إلى جانب ذلك ، إذا كانت الشركة رابحة على المدى الطويل ، فيجب أن تكون على استعداد لتحمل خسائر مؤقتة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

4. The unfair-competition argument

Producers argue their competitors in another country have an unfair advantage, e.g. due to govt subsidies.

حجة المنافسة غير العادلة

يجادل المنتجون بأن منافسيهم في بلد آخر لهم ميزة غير عادلة ، على سبيل المثال ، بسبب دعم .الحكومة

Economists’ response: Great! Then we can import extra-cheap products subsidized by the

other country’s taxpayers. The gains to our consumers will exceed the losses to our

producers.

:رد االقتصاديين

.ثم يمكننا استيراد منتجات رخيصة الثمن مدعومة من دافعي الضرائب في البالد األخرى! عظيم

.سوف تتجاوز المكاسب التي يتحملها المستهلكون الخسائر التي يتعرض لها منتجونا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

5. The protection-as-bargaining-chip argument

Example: The U.S. can threaten to limit imports of French wine unless France lifts their quotas on American beef.

مساومة الرقاقةحجة الحماية ، كما

يمكن أن تهدد الواليات المتحدة الحد من واردات النبيذ الفرنسي ما لم ترفع فرنسا حصصها من لحوم : مثال .البقر األمريكية

Economists’ response: Suppose France refuses. Then the U.S. must choose between two bad

options:

A) Restrict imports from France, which reduces welfare in the U.S.

B) Don’t restrict imports, which reduces U.S. credibility.

:رد االقتصاديين

:بعد ذلك ، يجب على الواليات المتحدة االختيار بين خيارين سيئين. فرنسارفضت لنفترض

.تقييد الواردات من فرنسا ، مما يقلل من الرفاهية في الواليات المتحدة( أ

.ال تقيد االستيراد ، مما يقلل من مصداقية الواليات المتحدة( ب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Trade Agreementsاتفاقيات تجارية

▪ A country can liberalize trade with

▪ unilateral reductions in trade restrictions

▪ multilateral agreements with other nations

▪ يمكن لبلد تحرير التجارة مع ▪ تخفيضات من جانب واحد في القيود التجارية

▪ اتفاقات متعددة األطراف مع الدول األخرى

▪ Examples of trade agreements:

▪ North American Free Trade Agreement (NAFTA), 1993

▪ General Agreement on Tariffs and Trade (GATT), ongoing

▪ World Trade Organization (WTO), est. 1995, enforces trade agreements, resolves disputes

▪ :أمثلة على االتفاقيات التجارية

▪ 1993، ( نافتا)اتفاقية التجارة الحرة ألميركا الشمالية

▪ ، جارية( الجات)اتفاقية عامة بشأن التعريفات الجمركية والتجارة

▪ )منظمة التجارة العالمية WTO) ، تفرض االتفاقيات التجارية ، تحل النزاعات 1995عام ،

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A country will export a good if the world price of the good is higher

than the domestic price without trade. Trade raises producer surplus, reduces consumer surplus, and raises total surplus.

• ترفع التجارة . ستقوم الدولة بتصدير السلعة إذا كان سعر السلعة العالمي أعلى من السعر المحلي بدون تجارة .فائض المنتج ، وتقلل من فائض المستهلك ، وترفع الفائض الكلي

• A country will import a good if the world price

is lower than the domestic price without trade.

Trade lowers producer surplus but raises consumer and total surplus.

• التجارة تخفض فائض . سوف تستورد الدولة سلعة إذا كان السعر العالمي أقل من السعر المحلي بدون تجارة .اإلنتاج ولكنها تزيد من إجمالي المستهلك والفوائض

• A tariff benefits producers and generates revenue for the govt, but

the losses to consumers exceed these gains.

• يفيد التعريفات الجمركية المنتجين ويولد إيرادات للحكومة ، ولكن الخسائر التي يتكبدها المستهلكون تتجاوز هذه المكاسب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Common arguments for restricting trade include: protecting jobs,

defending national security, helping infant industries, preventing unfair competition, and responding to foreign trade restrictions.

• حماية الوظائف ، والدفاع عن األمن القومي ، ومساعدة : وتشمل الحجج الشائعة لتقييد التجارة ما يلي .الصناعات الناشئة ، ومنع المنافسة غير المشروعة ، والرد على القيود المفروضة على التجارة الخارجية

• Some of these arguments have merit in some cases, but

economists believe free trade is usually the better policy.

• بعض هذه الحجج لها ميزة في بعض الحاالت ، ولكن يعتقد االقتصاديون أن التجارة الحرة هي .عادة السياسة األفضل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Country That Imports Plasma TVs

Without trade,

PD = $3000

Q = 400

PW = $1500

Under free trade,

▪ domestic

consumers

demand 600

▪ domestic producers

supply 200

▪ imports = 400

$1500

200

$3000

400 600

Plasma TVs

imports

A Country That Imports Plasma TVs

Without trade,

CS = A

PS = B + C

Total surplus

= A + B + C

With trade,

CS = A + B + D

PS = C

Total surplus

= A + B + C + D

$1500

$3000

Plasma TVs

B D

gains from trade

imports

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What is Gross Domestic Product (GDP)?

• How is GDP related to a nation’s total income and spending?

• What are the components of GDP?

• How is GDP corrected for inflation?

• Does GDP measure society’s well-being?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Micro vs. Macro

▪ Microeconomics: The study of how individual households and firms make decisions,

interact with one another in markets. ▪ دراسة كيفية قيام األسر والشركات الفردية باتخاذ القرارات ، والتفاعل مع بعضها البعض في

.األسواق

▪ Macroeconomics:

The study of the economy as a whole.

▪ دراسة االقتصاد ككل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Income and Expenditure

▪ Gross Domestic Product (GDP) measures

total income of everyone in the economy.

▪ GDP also measures total expenditure on the economy’s output of g&s.

▪ .يقيس الدخل الكلي للجميع في االقتصاد

▪ يقيس الناتج المحلي اإلجمالي أيًضا إجمالي اإلنفاق على ناتج االقتصاد من السلع والخدمات For the economy as a whole,

income equals expenditure

because every dollar a buyer spends

is a dollar of income for the seller.

بالنسبة لالقتصاد ككل ، فإن الدخل يساوي اإلنفاق ألن كل دوالر ينفقه المشتري هو دوالر من .دخل البائع

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Circular-Flow Diagramمخطط التدفق الدائري

▪ a simple depiction of the macroeconomy

▪ الكليتصوير بسيط لالقتصاد

▪ illustrates GDP as spending, revenue, factor payments, and income

▪ ودخليوضح الناتج المحلي اإلجمالي كنفقات ، وإيرادات ، ومدفوعات عامل ،

▪ Preliminaries:

▪ Factors of production are inputs like labor, land, capital, and natural resources.

▪ Factor payments are payments to the factors of production

(e.g., wages, rent).

▪ :التصفيات

▪ .عوامل اإلنتاج هي مدخالت مثل العمالة واألرض ورأس المال والموارد الطبيعية

▪ (.على سبيل المثال ، األجور ، اإليجار)مدفوعات العامل هي مدفوعات لعوامل اإلنتاج

The Circular-Flow Diagram Households:

▪ own the factors of production, sell/rent them to firms for income

▪ buy and consume goods & services

▪ :األسر

▪ تأجيرها للشركات للحصول على دخل/ امتالك عوامل اإلنتاج ، بيعها

▪ شراء واستهالك السلع والخدمات

Households Firms

Firms:

▪ buy/hire factors of production, use them to produce goods and services

▪ sell goods & services

▪ :شركات

▪ استئجار عوامل اإلنتاج ، واستخدامها إلنتاج السلع والخدمات/ شراء

▪ بيع السلع والخدمات

The Circular-Flow Diagram

Markets for Factors of Production

Households Firms

Income (=GDP) Wages, rent, profit (=GDP)

Factors of production

Labor, land, capital

Spending (=GDP)

G & S bought

G & S sold

Revenue (=GDP) Markets for Goods & Services

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What This Diagram Omits

▪ The government

▪ collects taxes, buys g&s

▪ الحكومة ▪ ويشتري البضائع والخدماتتجمع الضرائب

▪ The financial system

▪ matches savers’ supply of funds with borrowers’ demand for loans

▪ النظام المالي ▪ تتطابق مع عرض المدخرات لألموال مع طلب المقترضين للحصول على قروض

▪ The foreign sector

▪ trades g&s, financial assets, and currencies with the country’s residents

▪ القطاع األجنبي ▪ تداول السلع والخدمات واألصول المالية والعمالت مع سكان البلد

…the market value of all final goods & services produced within

a country in a given period of time. القيمة السوقية لجميع السلع والخدمات النهائية المنتجة داخل بلد ما في فترة زمنية معينة

Gross Domestic Product (GDP) Is…

Goods are valued at their market prices, so:

▪ All goods measured in the same units

(e.g., dollars in the U.S.)

▪ Things that don’t have a market value are excluded, e.g., housework you do for yourself.

▪ يتم تقييم السلع بأسعارها في السوق ، لذلك ▪ (على سبيل المثال ، بالدوالر في الواليات المتحدة)جميع السلع المقاسة في الوحدات نفسها

▪ .يتم استبعاد األشياء التي ال تحتوي على قيمة سوقية ، مثل األعمال المنزلية التي تقوم بها لنفسك

…the market value of all final goods & services produced within

a country in a given period of time.

.القيمة السوقية لجميع السلع والخدمات النهائية المنتجة داخل بلد ما في فترة زمنية معينة

Gross Domestic Product (GDP) Is…

Final goods: intended for the end user

مخصصة للمستخدم النهائي: البضائع النهائية

Intermediate goods: used as components

or ingredients in the production of other goods

GDP only includes final goods—they already embody the value of

the intermediate goods

used in their production.

تستخدم كمكونات أو مكونات في إنتاج السلع األخرى: السلع الوسيطة

فهي تجسد بالفعل قيمة السلع الوسيطة المستخدمة في —الناتج المحلي اإلجمالي ال يشمل سوى السلع النهائية .إنتاجها

…the market value of all final goods & services

produced within a country

in a given period of time.

.القيمة السوقية لجميع السلع والخدمات النهائية المنتجة داخل بلد ما في فترة زمنية معينة

Gross Domestic Product (GDP) Is…

GDP includes tangible goods

(like DVDs, mountain bikes, beer)

and intangible services

(dry cleaning, concerts, cell phone service).

(مثل دي في دي ، الدراجات الجبلية ، البيرة)السلع الملموسة للمنتج المحلي اإلجمالي

(.الجاف ، الحفالت الموسيقية ، خدمة الهاتف الخلويالتنظيف )الملموسه والخدمات غير

…the market value of all final goods &

services produced within a country in a

given period of time. القيمة السوقية لجميع السلع والخدمات النهائية المنتجة داخل بلد ما في فترة زمنية معينة

Gross Domestic Product (GDP) Is…

GDP includes currently produced goods,

not goods produced in the past.

يشمل الناتج المحلي اإلجمالي السلع المنتجة حاليًا وليس السلع التي تم إنتاجها في .الماضي

…the market value of all final goods & services produced within a country

in a given period of time.

.القيمة السوقية لجميع السلع والخدمات النهائية المنتجة داخل بلد ما في فترة زمنية معينة

Gross Domestic Product (GDP) Is…

GDP measures the value of production that occurs

within a country’s borders, whether done by its own citizens or by foreigners located there.

يقيس الناتج المحلي اإلجمالي قيمة اإلنتاج الذي يحدث داخل حدود البلد ، .سواء قام به مواطنوه أو أجانب موجودين هناك

…the market value of all final goods &

services produced within a country

in a given period of time.

.في فترة زمنية معينة لجميع السلع والخدمات النهائية المنتجة داخل بلد ماالسوقية القيمه

Gross Domestic Product (GDP) Is…

Usually a year or a quarter (3 months)

(أشهر 3)عادة ما تكون سنة أو ربع

The Components of GDPمهم

▪ Recall: GDP is total spending.

▪ Four components:

▪ Consumption (C)

▪ Investment (I)

▪ Government Purchases (G)

▪ Net Exports (NX)

▪ These components add up to GDP (denoted Y):

Y = C + I + G + NX

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumption (C)

▪ is total spending by households on g&s. والخدمات هو إجمالي إنفاق األسر على السلع

▪ Note on housing costs:

▪ For renters, consumption includes rent payments.

▪ For homeowners,

consumption includes the imputed rental value of the house, but not the purchase price or mortgage payments.

▪ :مالحظة حول تكاليف السكن

▪ .بالنسبة للمستأجرين ، يشمل االستهالك مدفوعات اإليجار

▪ بالنسبة ألصحاب المنازل ، يشمل االستهالك قيمة اإليجار المستحقة للمنزل ، ولكن ليس .سعر الشراء أو مدفوعات الرهن العقاري

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Investment (I)

▪ is total spending on goods that will be used in the future to produce

more goods. ▪ .هو إجمالي اإلنفاق على السلع التي سيتم استخدامها في المستقبل إلنتاج المزيد من السلع

▪ includes spending on

▪ capital equipment (e.g., machines, tools)

▪ structures (factories, office buildings, houses)

▪ inventories (goods produced but not yet sold)

▪ يتضمن االنفاق على ▪ (مثل اآلالت واألدوات)المعدات الرأسمالية

▪ (مصانع ، مباني مكاتب ، منازل)هياكل

▪ (البضائع المنتجة ولكن لم تباع بعد)المخزون

Note: “Investment” does not mean the purchase

of financial assets like stocks and bonds. ال يعني شراء األصول المالية مثل األسهم والسندات" االستثمار: "مالحظة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Government Purchases (G)

▪ is all spending on the g&s purchased by govt at the federal, state,

and local levels. ▪ السلع والخدمات التي تشتريها الحكومة على المستويات الفيدرالية هو اجمالي االنفاق على

.والوالئية والمحلية

▪ G excludes transfer payments, such as Social Security or

unemployment insurance benefits. They are not purchases of g&s.

▪ تستبعد المشتريات الحكومية مدفوعات التحويل ، مثل الضمان االجتماعي أو إعانات التأمين ضد .انهم ليسوا مشتريات من السلع والخدمات. البطالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Net Exports (NX)

▪ NX = exports – imports

▪ Exports represent foreign spending on the economy’s g&s.

▪ االقتصادتمثل الصادرات اإلنفاق األجنبي على سلع وخدمات

▪ Imports are the portions of C, I, and G that are spent on g&s

produced abroad.

▪ الواردات هي أجزاء من االستهالك ، واالستثمار ، والمشتريات الحكومية التي تنفق على السلع والخدمات .المنتجة في الخارج

▪ Adding up all the components of GDP gives:

▪ :إن إضافة جميع مكونات الناتج المحلي اإلجمالي يعطي

Y = C + I + G + NX

U.S. GDP and Its Components, 2010

–1,772

9,727

6,139

33,365

$47,459

per capita

–3.7

20.5

12.9

70.3

100.0

% of GDP

–550

3,022

1,907

10,366

$14,745

billions

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

GDP and its components

In each of the following cases, determine how much GDP and each of its

components is affected (if at all). (.إن وجد)في كل حالة من الحاالت التالية ، حدد مقدار اإلنتاج المحلي اإلجمالي وتأثر كل مكون من مكوناته

A. Debbie spends $200 to buy her husband dinner at the finest restaurant in

Boston. .دوالر لشراء عشاء زوجها في أرقى مطعم في بوسطن 200تنفق ديبي

B. Sarah spends $1800 on a new laptop to use in her publishing business.

The laptop was built in China. دوالًرا على كمبيوتر محمول جديد الستخدامه 1800تنفق سارة .تم بناء الكمبيوتر المحمول في الصين. في أعمال النشر الخاصة بها

C Jane spends $1200 on a computer to use in her editing business. She got

last year’s model on sale for a great price from a local manufacturer.

C. لقد حصلت على طراز العام . دوالر على الكمبيوتر الستخدامها في أعمال التحرير الخاصة بها Jane 1200تنفق .الماضي للبيع بسعر رائع من مصنع محلي

D. General Motors builds $500 million worth of cars, but consumers

only buy $470 million worth of them. 500شركة جنرال موتورز سيارات بقيمة تبني مليون دوالر فقط 470مليون دوالر ، لكن المستهلكين يشترون منها ما قيمته

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

A. Debbie spends $200 to buy her husband dinner

at the finest restaurant in Boston.

Consumption and GDP rise by $200.

B. Sarah spends $1800 on a new laptop to use in

her publishing business. The laptop was built in

China.

Investment rises by $1800, net exports fall

by $1800, GDP is unchanged.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

C. Jane spends $1200 on a computer to use in her

editing business. She got last year’s model on sale for a great price from a local manufacturer.

Current GDP and investment do not change,

because the computer was built last year.

D. General Motors builds $500 million worth of cars,

but consumers only buy $470 million of them.

Consumption rises by $470 million,

inventory investment rises by $30 million,

and GDP rises by $500 million.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Real versus Nominal GDP

▪ Inflation can distort economic variables like GDP, so we have two

versions of GDP: ▪ التضخم يمكن أن يشوه المتغيرات االقتصادية مثل الناتج المحلي اإلجمالي ، لذلك لدينا نسختين من الناتج

:المحلي اإلجمالي

▪ Nominal GDP ▪ values output using current prices قيم الناتج باستخدام األسعار الحاليه ▪ not corrected for inflation لم يتم تصحيحه بسبب التضخم

▪ Real GDP ▪ values output using the prices of a base year

▪ is corrected for inflation

▪ باستخدام أسعار سنة األساسقيم الناتج

▪ يتم تصحيحه للتضخم

EXAMPLE:

Compute nominal GDP in each year:

2011: $10 x 400 + $2 x 1000 = $6,000

2012: $11 x 500 + $2.50 x 1100 = $8,250

2013: $12 x 600 + $3 x 1200 = $10,800

Pizza Latte

year P Q P Q

2011 $10 400 $2.00 1000

2012 $11 500 $2.50 1100

2013 $12 600 $3.00 1200

37.5%

Increase:

30.9%

EXAMPLE:

Compute real GDP in each year, using 2011 as the base year:

Pizza Latte

year P Q P Q

2011 $10 400 $2.00 1000

2012 $11 500 $2.50 1100

2013 $12 600 $3.00 1200

20.0%

Increase:

16.7%

$10 $2.00

2011: $10 x 400 + $2 x 1000 = $6,000

2012: $10 x 500 + $2 x 1100 = $7,200

2013: $10 x 600 + $2 x 1200 = $8,400

EXAMPLE:

In each year,

▪ nominal GDP is measured using the (then)

current prices.

▪ real GDP is measured using constant prices from

the base year (2011 in this example).

year

Nominal

GDP

Real

GDP

2011 $6000 $6000

2012 $8250 $7200

2013 $10,800 $8400

EXAMPLE:

▪ The change in nominal GDP reflects both prices and quantities. • .يعكس التغيير في الناتج المحلي اإلجمالي االسمي كل من األسعار والكميات

year

Nominal

GDP

Real

GDP

2011 $6000 $6000

2012 $8250 $7200

2013 $10,800 $8400

20.0%

16.7 %

37.5%

30.9%

▪ The change in real GDP is the amount that GDP would change if prices

were constant (i.e., if zero inflation). ▪ التغيير في الناتج المحلي اإلجمالي الحقيقي هو المبلغ الذي سيتغير الناتج المحلي اإلجمالي إذا كانت

أي إذا كان التضخم صفًرا)األسعار ثابتة

Hence, real GDP is corrected for inflation. .وبالتالي ، يتم تصحيح الناتج المحلي اإلجمالي الحقيقي للتضخم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The GDP Deflator معامل انكماش الناتج المحلي اإلجمالي

▪ The GDP deflator is a measure of the overall level of prices.

▪ لألسعارمعامل انكماش الناتج المحلي اإلجمالي هو مقياس للمستوى العام

▪ Definition:

▪ One way to measure the economy’s inflation rate is to compute

the percentage increase in the GDP deflator from one year to the next. وتتمثل إحدى طرق قياس معدل التضخم في االقتصاد في حساب الزيادة المئوية في .معامل انكماش الناتج المحلي اإلجمالي من سنة إلى أخرى

GDP deflator = 100 x nominal GDP

real GDP

EXAMPLE:

Compute the GDP deflator in each year:

year

Nominal

GDP

Real

GDP

Deflator

2011 $6000 $6000

2012 $8250 $7200

2013 $10,800 $8400

2011: 100 x (6000/6000) = 100.0

100.0

2012: 100 x (8250/7200) = 114.6

114.6

2013: 100 x (10,800/8400) = 128.6

128.6

14.6%

12.2%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2مهم

Computing GDP

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Use the above data to solve these problems:

A. Compute nominal GDP in 2011.

B. Compute real GDP in 2012.

C. Compute the GDP deflator in 2013.

2011 (base yr) 2012 2013

P Q P Q P Q

Good A $30 900 $31 1000 $36 1050

Good B $100 192 $102 200 $100 205

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Compute nominal GDP in 2011.

$30 x 900 + $100 x 192 = $46,200

B. Compute real GDP in 2012.

$30 x 1000 + $100 x 200 = $50,000

2011 (base yr) 2012 2013

P Q P Q P Q

Good A $30 900 $31 1,000 $36 1050

Good B $100 192 $102 200 $100 205

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

C. Compute the GDP deflator in 2013.

Nom GDP = $36 x 1050 + $100 x 205 = $58,300

Real GDP = $30 x 1050 + $100 x 205 = $52,000

GDP deflator = 100 x (Nom GDP)/(Real GDP)

= 100 x ($58,300)/($52,000) = 112.1

2011 (base yr) 2012 2013

P Q P Q P Q

Good A $30 900 $31 1,000 $36 1050

Good B $100 192 $102 200 $100 205

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

GDP and Economic Well-Being

▪ Real GDP per capita is the main indicator of the average

person’s standard of living.

▪ الناتج المحلي اإلجمالي الحقيقي للفرد الواحد هو المؤشر الرئيسي لمستوى معيشة الشخص .العادي

▪ But GDP is not a perfect measure of

well-being.

▪ .لكن الناتج المحلي اإلجمالي ليس مقياسا مثاليا للرفاهية

▪ Robert Kennedy issued a very eloquent

yet harsh criticism of GDP:

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

GDP Does Not Value:

▪ the quality of the environment

▪ leisure time

▪ non-market activity, such as the child care

a parent provides his or her child at home

▪ an equitable distribution of income

▪ نوعية البيئة

▪ وقت الفراغ

▪ النشاط غير السوقي ، مثل رعاية الطفل ، يقدم أحد الوالدين طفله في المنزل

▪ توزيع عادل للدخل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Then Why Do We Care About GDP?

▪ Having a large GDP enables a country to afford better schools, a

cleaner environment, health care, etc. ▪ إن وجود الناتج المحلي اإلجمالي الكبير يمّكن البالد من توفير مدارس أفضل ، وبيئة أنظف ، ورعاية صحية

.، إلخ

▪ Many indicators of the quality of life are positively correlated with

GDP. For example…

▪ فمثال. ترتبط مؤشرات كثيرة لجودة الحياة بشكل إيجابي مع الناتج المحلي اإلجمالي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Gross Domestic Product )GDP( measures a country’s total income and expenditure.

• .يقيس الناتج المحلي اإلجمالي إجمالي الدخل والنفقات للبلد

The four spending components of GDP include: Consumption, Investment, Government Purchases, and Net Exports.

االستهالك ، واالستثمار ، والمشتريات الحكومية ، : تشمل مكونات اإلنفاق األربعة في الناتج المحلي اإلجمالي .وصافي الصادرات

• Nominal GDP is measured using current prices. Real GDP is measured using the prices of a constant base year and is corrected

for inflation.

• يتم قياس الناتج المحلي اإلجمالي الحقيقي . يتم قياس الناتج المحلي اإلجمالي االسمي باستخدام األسعار الحالية .باستخدام أسعار عام أساس ثابت ويتم تصحيحه للتضخم

• GDP is the main indicator of a country’s economic well-being, even though

it is not perfect. الناتج المحلي اإلجمالي هو المؤشر الرئيسي للرفاهية االقتصادية للبلد ، رغم أنه ليس مثاليا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What is the Consumer Price Index (CPI)?

How is it calculated? What’s it used for?

• What are the problems with the CPI? How

serious are they?

• How does the CPI differ from the GDP deflator?

• How can we use the CPI to compare dollar

amounts from different years? Why would we

want to do this, anyway?

• How can we correct interest rates for inflation?

The Consumer Price Index (CPI)

▪ measures the typical consumer’s cost of living

• يقيس تكلفة المعيشة المعيارية للمستهلك

▪ the basis of cost of living adjustments (COLAs) in many

contracts and in Social Security

• في العديد من العقود وفي الضمان ( كوالس)أساس تسويات تكاليف المعيشة االجتماعي

How the CPI Is Calculated

Fix the “basket.”

The Bureau of Labor Statistics (BLS) surveys consumers to determine what’s in the typical consumer’s “shopping basket.”

لدى " سلة التسوق"بمسح المستهلكين لتحديد ما هو ( بلس)يقوم مكتب إحصائيات العمل ". السلة»إصالح .المستهلك العادي

Find the prices.

The BLS collects data on the prices of all the goods in the basket.

السلهالبيانات عن أسعار جميع السلع في تجمع » بلس"ال اعثر على

Compute the basket’s cost. Use the prices to compute the total cost of the basket.

.استخدام األسعار لحساب التكلفة اإلجمالية للسلة: السلةحساب تكلفة

How the CPI Is Calculatedمهم

Choose a base year and compute the index. The CPI in any year equals يساويمؤشر سعر المستهلك في أي عام

Compute the inflation rate. The percentage change in the CPI from the preceding period. .النسبة المئوية للتغير في مؤشر أسعار المستهلك من الفترة السابقة

100 x cost of basket in current year

cost of basket in base year

CPI this year – CPI last year

CPI last year

Inflation

rate x 100% =

EXAMPLE basket: {4 pizzas, 10 lattes}

$12 x 4 + $3 x 10 = $78

$11 x 4 + $2.5 x 10 = $69

$10 x 4 + $2 x 10 = $60

cost of basket

$3.00

$2.50

$2.00

price of

latte

$12 2012

$11 2011

$10 2010

price of

pizza year

Compute CPI in each year

2010: 100 x ($60/$60) = 100

2011: 100 x ($69/$60) = 115

2012: 100 x ($78/$60) = 130

Inflation rate:

15% 115 –

100 100

100% =

13% 130 –

115 115

100% =

using 2010 base year:

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Calculate the CPIمهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CPI basket:

{10 lbs beef,

20 lbs chicken}

The CPI basket cost $120

in 2010, the base year.

A. Compute the CPI in 2011.

B. What was the CPI inflation rate from 2011–2012?

price

of beef

price of

chicken

2010 $4 $4

2011 $5 $5

2012 $9 $6

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Compute the CPI in 2011:

Cost of CPI basket in 2011

= ($5 x 10) + ($5 x 20) = $150

CPI in 2011 = 100 x ($150/$120) = 125

CPI basket:

{10 lbs beef,

20 lbs chicken}

The CPI basket cost $120

in 2010, the base year.

price

of beef

price of

chicken

2010 $4 $4

2011 $5 $5

2012 $9 $6

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

price

of beef

price of

chicken

2010 $4 $4

2011 $5 $5

2012 $9 $6

CPI basket:

{10 lbs beef,

20 lbs chicken}

The CPI basket cost $120

in 2010, the base year.

B. What was the inflation rate from 2011–2012?

Cost of CPI basket in 2012

= ($9 x 10) + ($6 x 20) = $210

CPI in 2012 = 100 x ($210/$120) = 175

CPI inflation rate = (175 – 125)/125 = 40%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Substitution bias

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CPI basket:

{10# beef,

20# chicken}

2010–11:

Households

bought CPI basket.

2012: Households bought {5 lbs beef, 25 lbs chicken}.

beef chicken cost of CPI

basket

2010 $4 $4 $120

2011 $5 $5 $150

2012 $9 $6 $210

A. Compute cost of the 2012 household basket.

B. Compute % increase in cost of household basket

over 2011–12, compare to CPI inflation rate.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Compute cost of the 2012 household basket.

($9 x 5) + ($6 x 25) = $195

CPI basket: {10# beef,

20# chicken}

Household

basket in 2012: {5# beef,

25# chicken}

beef chicken cost of CPI

basket

2010 $4 $4 $120

2011 $5 $5 $150

2012 $9 $6 $210

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

B. Compute % increase in cost of household basket

over 2011–12, compare to CPI inflation rate.

Rate of increase: ($195 – $150)/$150 = 30%

CPI inflation rate from previous problem = 40%

CPI basket: {10# beef,

20# chicken}

Household

basket in 2012: {5# beef,

25# chicken}

beef chicken cost of CPI

basket

2010 $4 $4 $120

2011 $5 $5 $150

2012 $9 $6 $210

Problems with the CPI: Substitution Bias استبدال التحيز

▪ Over time, some prices rise faster than others.

▪ Consumers substitute toward goods that become relatively cheaper, mitigating the effects of price increases.

▪ The CPI misses this substitution because it uses a fixed basket of

goods.

▪ Thus, the CPI overstates increases in the cost of living.

• .مع مرور الوقت ، ترتفع بعض األسعار بشكل أسرع من غيرها

• .يستبدل المستهلكون السلع التي تصبح أرخص نسبياً ، مما يخفف من آثار ارتفاع األسعار

• .يفتقد مؤشر سعر المستهلك هذا االستبدال ألنه يستخدم سلة ثابتة من البضائع

• .وبالتالي ، فإن مؤشر أسعار المستهلكين يفرط في الزيادة في تكاليف المعيشة

Problems with the CPI: Introduction of New Goods مقدمة من السلع الجديدة

▪ The introduction of new goods increases variety, allows consumers

to find products that more closely meet their needs.

▪ In effect, dollars become more valuable.

▪ The CPI misses this effect because it uses a fixed basket of goods.

▪ Thus, the CPI overstates increases in the cost of living.

• ويؤدي إدخال السلع الجديدة إلى زيادة التنوع ، مما يسمح للمستهلكين بالعثور على المنتجات التي .تلبي احتياجاتهم عن كثب

• .في الواقع ، تصبح الدوالرات أكثر قيمة

• .يفشل مؤشر أسعار المستهلك هذا التأثير ألنه يستخدم سلة ثابتة من البضائع

• .وبالتالي ، فإن مؤشر أسعار المستهلكين يفرط في الزيادة في تكاليف المعيشة

Problems with the CPI: Unmeasured Quality Change المقاسهتغيير الجودة غير

▪ Improvements in the quality of goods in the basket increase the value

of each dollar.

▪ The BLS tries to account for quality changes

but probably misses some, as quality is hard to measure.

▪ Thus, the CPI overstates increases in the cost of living.

• .التحسينات في جودة السلع في السلة تزيد من قيمة كل دوالر

• حساب التغييرات في الجودة ، لكنه ربما يفقد بعًضا ، نظًرا ألنه من الصعب قياس " بلس"يحاول .الجودة

• .وبالتالي ، فإن مؤشر أسعار المستهلكين يفرط في الزيادة في تكاليف المعيشة

Problems with the CPI

▪ Each of these problems causes the CPI to overstate cost of living

increases.

▪ The BLS has made technical adjustments,

but the CPI probably still overstates inflation

by about 0.5 percent per year.

▪ This is important because Social Security payments and many

contracts have COLAs tied to the CPI.

• .في ارتفاع تكاليف المعيشةمؤشر أسعار المستهلك المبالغة كل من هذه المشاكل يسبب

• بإجراء تعديالت تقنية ، لكن مؤشر أسعار المستهلكين ربما يبالغ في تضخيم " بلس"لقد قامت شركة .٪ سنوياً 0.5التضخم بنسبة

• هذا أمر مهم ألن مدفوعات الضمان االجتماعي والعديد من العقود لديها كوال مرتبطة بمؤشر أسعار .المستهلك

Imported consumer goods:

▪ included in CPI

▪ excluded from GDP deflator

– :السلع االستهالكية المستوردة

– المدرجة في مؤشر أسعار المستهلك – مستبعدة من معامل انكماش الناتج المحلي اإلجمالي

The basket:

▪ CPI uses fixed basket

▪ GDP deflator uses basket of

currently produced goods & services

This matters if different prices are

changing by different amounts. :السلة

سي بي أي يستخدم سلة ثابتة

معامل انكماش الناتج المحلي اإلجمالي يستخدم سلة السلع والخدمات التي يتم إنتاجها حاليًا

هذا يهم إذا تغيرت أسعار مختلفة بكميات مختلفة

Capital goods:

▪ excluded from CPI

▪ included in GDP deflator (if produced domestically)

▪ :السلع الرأسمالية

▪ CPIمستبعدة من

▪ إذا تم )مدرج في معامل انكماش الناتج المحلي اإلجمالي (إنتاجه محليًا

Contrasting the CPI and GDP Deflatorمهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

CPI vs. GDP deflator

In each scenario, determine the effects on the

CPI and the GDP deflator.

A. Starbucks raises the price of Frappuccinos.

B. Caterpillar raises the price of the industrial

tractors it manufactures at its Illinois factory.

C. Armani raises the price of the Italian jeans it

sells in the U.S.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

A. Starbucks raises the price of Frappuccinos.

The CPI and GDP deflator both rise.

B. Caterpillar raises the price of the industrial

tractors it manufactures at its Illinois factory.

The GDP deflator rises, the CPI does not.

C. Armani raises the price of the Italian jeans it

sells in the U.S.

The CPI rises, the GDP deflator does not.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Correcting Variables for Inflation:

Comparing Dollar Figures from Different Times

▪ Inflation makes it harder to compare dollar amounts from different times.

• .التضخم يجعل من الصعب مقارنة المبالغ بالدوالر من أوقات مختلفة

▪ Example: the minimum wage

▪ $1.15 in Dec 1964

▪ $7.25 in Dec 2010

▪ Did min wage have more purchasing power in

Dec 1964 or Dec 2010?

▪ To compare, use CPI to convert 1964 figure into

“today’s dollars”…

▪ In our example,

▪ “year T” is 12/1964, “today” is 12/2010

▪ Min wage was $1.15 in year T

▪ CPI = 31.3 in year T, CPI = 220.3 today

Correcting Variables for Inflation:

Comparing Dollar Figures from Different Times

Amount in today’s

dollars

Amount in year T dollars

Price level today

Price level in year T = x

$8.09 $1.15 220.3 31.3

= x The minimum wage

in 1964 was $8.09

in today’s )2010) dollars.

Correcting Variables for Inflation:

Comparing Dollar Figures from Different Times

▪ Researchers, business analysts, and policymakers often use this

technique to convert a time series of current-dollar (nominal) figures into constant-dollar (real) figures.

• غالباً ما يستخدم الباحثون ومحللو األعمال وصناع القرار هذه التقنية لتحويل سلسلة زمنية من .بالدوالر( حقيقية)بالدوالر إلى أرقام ثابتة ( االسمية)األرقام الحالية

▪ They can then see how a variable has changed over time after

correcting for inflation.

• .ويمكنهم بعد ذلك أن يروا كيف تغير المتغير مع مرور الوقت بعد تصحيح التضخم

▪ Example: the minimum wage, from Jan 1960 to

Dec 2010…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Comparing tuition increases

Tuition and Fees at U.S. Colleges and Universities

1990 2010

Private non-profit 4-year $9,340 $27,293

Public 4-year $1,908 $7,605

Public 2-year $906 $2,713

CPI 130.7 218.1

Instructions: Express the 1990 tuition figures in 2010

dollars, then compute the percentage increase for all

three types of schools. Which type experienced the

largest increase in real tuition costs?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Answers

1990 2010 % change

CPI 130.7 218.1 66.9%

Private non-profit 4-year (current $)

$9,340 $27,293

Private non-profit 4-year (2010 $)

$15,586 $27,293 75.1%

Public 4-year (current $) $1,908 $7,605

Public 4-year (2010 $) $3,184 $7,605 138.9%

Public 2-year (current $) $906 $2,713

Public 2-year (2010 $) $1,512 $2,713 79.4%

Correcting Variables for Inflation:

Indexationالفهرسه

For example, the increase in the CPI automatically

determines

▪ the COLA in many multi-year labor contracts

▪ adjustments in Social Security payments and

federal income tax brackets

A dollar amount is indexed for inflation if it is automatically corrected for inflation

by law or in a contract. .يتم فهرسة مبلغ بالدوالر للتضخم إذا تم تصحيحه تلقائيًا بالتضخم بموجب القانون أو في العقد

Correcting Variables for Inflation:

Real vs. Nominal Interest Rates

The nominal interest rate:

▪ the interest rate not corrected for inflation

▪ the rate of growth in the dollar value of a

deposit or debt

– :معدل الفائدة االسمي

– سعر الفائدة غير مصحح للتضخم

– معدل النمو في قيمة الدوالر من الودائع أو الديون

The real interest rate:

▪ corrected for inflation

▪ the rate of growth in the purchasing power of a deposit or debt

– :سعر الفائدة الحقيقي

– تصحيح للتضخم – معدل النمو في القوة الشرائية للودائع أو الديون

Real interest rate

= (nominal interest rate) – (inflation rate)

Correcting Variables for Inflation:

Real vs. Nominal Interest Rates

Example:

▪ Deposit $1,000 for one year.

▪ Nominal interest rate is 9%.

▪ During that year, inflation is 3.5%.

▪ Real interest rate

= Nominal interest rate – Inflation

= 9.0% – 3.5% = 5.5%

▪ The purchasing power of the $1000 deposit

has grown 5.5%.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The Consumer Price Index is a measure of the cost of living. The

CPI tracks the cost of the typical consumer’s “basket” of goods & services.

• السلع " سلة"يتتبع مؤشر أسعار المستهلك تكلفة . مؤشر أسعار المستهلك هو مقياس لتكلفة المعيشة االستهالكية النموذجية للسلع والخدمات

• The CPI is used to make Cost of Living Adjustments and to correct

economic variables for the effects of inflation.

• يستخدم مؤشر أسعار المستهلكين إلجراء تعديالت تكلفة المعيشة وتصحيح المتغيرات االقتصادية آلثار .التضخم

• The real interest rate is corrected for inflation and is computed by

subtracting the inflation rate from the nominal interest rate.

• يتم تصحيح معدل الفائدة الحقيقي للتضخم ويحسب عن طريق طرح معدل التضخم من سعر الفائدة االسمي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are the facts about living standards and

growth rates around the world?

• Why does productivity matter for living

standards?

• What determines productivity and its growth

rate?

• How can public policy affect growth and living

standards?

A typical family with all their possessions in

the U.K., an advanced economy

GDP per capita: $36,130

Life expectancy: 80 years

Adult literacy: 99%

A typical family with all their possessions in

Mexico, a middle income country

GDP per capita: $14,270

Life expectancy: 76 years

Adult literacy: 86%

A typical family with all their possessions in

Mali, a poor country

GDP per capita: $1,090

Life expectancy: 52 years

Adult literacy: 46%

GDP per

capita, 2009

Growth rate,

1970–2009

China $6,828 7.4%

Singapore $50,633 4.7%

India $3,296 3.3%

Japan $32,418 2.2%

Spain $32,150 2.1%

Israel $27,656 2.1%

Colombia $8,959 1.9%

United States $45,989 1.8%

Canada $37,808 1.7%

Philippines $3,542 1.3%

Rwanda $1,136 1.1%

New Zealand $28,993 1.1%

Argentina $14,538 1.0%

Saudi Arabia $23,480 0.6%

Chad $1,300 0.4%

Incomes and Growth Around the

World

FACT 1:

There are

vast

differences

in living

standards

around the

world.

GDP per

capita, 2009

Growth rate,

1970–2009

China $6,828 7.4%

Singapore $50,633 4.7%

India $3,296 3.3%

Japan $32,418 2.2%

Spain $32,150 2.1%

Israel $27,656 2.1%

Colombia $8,959 1.9%

United States $45,989 1.8%

Canada $37,808 1.7%

Philippines $3,542 1.3%

Rwanda $1,136 1.1%

New Zealand $28,993 1.1%

Argentina $14,538 1.0%

Saudi Arabia $23,480 0.6%

Chad $1,300 0.4%

Incomes and Growth Around the

World

FACT 2:

There is

also great

variation

in growth

rates across

countries.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Incomes and Growth Around the World

Since growth rates vary, the country rankings can change over time:

▪ Poor countries are not necessarily doomed to poverty forever, e.g.

Singapore incomes were low in 1960 and are quite high now.

▪ Rich countries can’t take their status for granted: They may be overtaken by poorer but

faster-growing countries.

▪ :نظًرا الختالف معدالت النمو ، يمكن أن تتغير تصنيفات البلد بمرور الوقت

▪ كانت دخول . الدول الفقيرة ليست بالضرورة محكوم عليها بالفقر إلى األبد ، على سبيل المثال .وهي مرتفعة للغاية اآلن 1960سنغافورة منخفضة في عام

▪ فقد تتفوق عليها الدول األكثر فقراً ولكن : ال يمكن للدول الغنية أن تأخذ وضعها كأمر مسلم به .األسرع نمواً

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Incomes and Growth Around the World

Questions:

▪ Why are some countries richer than others?

▪ Why do some countries grow quickly while

others seem stuck in a poverty trap?

▪ What policies may help raise growth rates and

long-run living standards?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Productivity

▪ Recall one of the Ten Principles from Chap. 1:

A country’s standard of living depends on its ability to

produce g&s. .يعتمد مستوى المعيشة للبلد على قدرته على إنتاج السلع والخدمات

▪ This ability depends on productivity, the average quantity of g&s produced per unit of labor input.

▪ .تعتمد هذه القدرة على اإلنتاجية ، وكمية السلع والخدمات المنتَجة لكل وحدة من مدخالت العمل

▪ Y = real GDP = quantity of output produced

L = quantity of labor

so productivity = Y/L (output per worker)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why Productivity Is So Important

▪ When a nation’s workers are very productive, real GDP is large and incomes are high.

▪ When productivity grows rapidly, so do living standards.

▪ عندما يكون عمال الدولة منتجين جدا ، يكون الناتج المحلي اإلجمالي الحقيقي .كبيرا والدخل مرتفع

▪ .عندما تنمو اإلنتاجية بسرعة ، وكذلك مستويات المعيشة

▪ What, then, determines productivity and its

growth rate?

Physical Capital Per Workerرأس المال المادي لكل عامل

▪ Recall: The stock of equipment and structures used to produce g&s

is called [physical] capital, denoted K.

• ، [ المادي]مخزون المعدات والهياكل المستخدمة إلنتاج السلع والخدمات يسمى رأس المال : تذكر .Kويشار إلى

▪ K/L = capital per worker.

▪ Productivity is higher when the average worker has more capital

(machines, equipment, etc.).

• اآلالت والمعدات )تكون اإلنتاجية أعلى عندما يكون لدى العامل العادي قدر أكبر من رأس المال (.وغيرها

▪ i.e.,

an increase in K/L causes an increase in Y/L.

Human Capital Per Worker رأس المال البشري لكل عامل

▪ Human capital (H): رأس المال البشري

the knowledge and skills workers acquire through education,

training, and experience

• والمهارات من خالل التعليم والتدريب والخبرةالمعرفه اكتساب العمال

▪ H/L = the average worker’s human capital

▪ Productivity is higher when the average worker has more human

capital (education, skills, etc.).

• متوسط رأس المال البشري للعامل

• (.التعليم ، المهارات ، إلخ)تكون اإلنتاجية أعلى عندما يكون لدى العامل العادي رأس مال بشري أكثر

▪ i.e.,

an increase in H/L causes an increase in Y/L.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Natural Resources Per Workerالموارد الطبيعية لكل عامل

▪ Natural resources (N): the inputs into production that nature provides, e.g., land, mineral deposits

▪ المعدنيةمدخالت اإلنتاج التي توفرها الطبيعة ، على سبيل المثال ، األراضي ، الرواسب

▪ Other things equal, more N allows a country to produce more Y.

In per-worker terms, an increase in N/L causes an increase in Y/L.

▪ Some countries are rich because they have abundant natural resources (e.g., Saudi Arabia has lots of oil).

▪ But countries need not have much N to be rich (e.g., Japan imports the N it needs).

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Technological Knowledgeالمعرفة التكنولوجية

▪ Technological knowledge: society’s understanding of the best ways to produce g&s

▪ فهم المجتمع ألفضل الطرق إلنتاج السلع والخدمات

Technological progress does not only mean a faster computer, a higher-definition TV, or a smaller cell phone.

خلويا أصغرال يعني التقدم التكنولوجي حاسوبًا أسرع ، أو تلفزيونًا عالي الوضوح ، أو هاتفًا

▪ It means any advance in knowledge that boosts productivity (allows society to get more output from its resources).

▪ e.g., Henry Ford and the assembly line.

▪ يسمح للمجتمع بالحصول على المزيد من )وهذا يعني أي تقدم في المعرفة يعزز اإلنتاجية (.الموارد من موارده

▪ .على سبيل المثال ، هنري فورد وخط التجميع

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Tech. Knowledge vs. Human Capital

▪ Technological knowledge refers to society’s understanding of how to produce g&s.

▪ Human capital results from the effort people expend to

acquire this knowledge.

▪ Both are important for productivity.

▪ تشير المعرفة التكنولوجية إلى فهم المجتمع لكيفية إنتاج السلع والخدمات

▪ .ينتج رأس المال البشري عن الجهد الذي يبذله الناس للحصول على هذه المعرفة

▪ كالهما مهم لإلنتاجية

The Production Functionدالة االنتاج

▪ The production function is a graph or equation showing the relation

between output and inputs: • :هو الرسم البياني أو المعادلة التي تبين العالقة بين المخرجات والمدخالت

Y = A F(L, K, H, N)

F( ) is a function that shows how inputs are combined to produce

output المخرجاتهي وظيفة توضح كيف يتم الجمع بين المدخالت إلنتاج

“A” is the level of technology مستوى التكنولوجيا

▪ “A” multiplies the function F( ),

so improvements in technology )increases in “A”( allow more output (Y) to be produced from any given combination of inputs.

▪ تسمح بإنتاج المزيد (الزيادات في أي)لذا فإن التحسينات في التكنولوجيا( اف)تضاعف الداله ( أي) من أي مجموعة مدخالت معينه( واي)من

The Production Function

▪ The production function has the property constant returns to scale: Changing all inputs by the same percentage causes output to change by that percentage. For example,

▪ Doubling all inputs (multiplying each by 2) causes output to double:

• يؤدي تغيير جميع المدخالت بنفس النسبة إلى تغيير الناتج بنسبة : تحتوي دالة اإلنتاج على عوائد ثابتة للقيمة :يتسبب في مضاعفة اإلنتاج( 2ضرب كل منها بـ )تضاعف جميع المدخالت , فمثال. النسبةتلك

• ،

Y = A F(L, K, H, N)

2Y = A F(2L, 2K, 2H, 2N)

▪ Increasing all inputs 10% (multiplying each by 1.1) causes output to increase by 10%: إلى زيادة ( 1.1ضرب كل منها بمقدار )٪ 10تؤدي زيادة كل المدخالت بنسبة

:٪10اإلنتاج بنسبة

1.1Y = A F(1.1L, 1.1K, 1.1H, 1.1N)

The Production Function

▪ If we multiply each input by 1/L, then output is multiplied by 1/L:

Y/L = A F(1, K/L, H/L, N/L)

▪ This equation shows that productivity (output per worker) depends on:

▪ the level of technology (A)

▪ physical capital per worker

▪ human capital per worker

▪ natural resources per worker

– :تعتمد على( اإلنتاج لكل عامل)توضح هذه المعادلة أن اإلنتاجية

– (أ)مستوى التكنولوجيا

– رأس المال المادي لكل عامل

– رأس المال البشري لكل عامل

– الموارد الطبيعية لكل عامل

Y = A F(L, K, H, N)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Discussion Question

Which of the following policies do you think would be most effective at boosting growth and living standards in a poor country over the long run?

a. Offer tax incentives for investment by local firms

b. ” ” ” ” ” by foreign firms

c. Give cash payments for good school attendance

d. Crack down on govt corruption

e. Restrict imports to protect domestic industries

f. Allow free trade

g. Give away condoms

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ECONOMIC GROWTH

AND PUBLIC POLICY

Next, we look at the ways

public policy can affect

long-run growth in productivity

and living standards.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Saving and Investment

▪ We can boost productivity by increasing K,

which requires investment.

▪ Since resources scarce, producing more capital requires producing

fewer consumption goods.

▪ Reducing consumption = increasing saving.

This extra saving funds the production of investment goods.

▪ .، األمر الذي يتطلب االستثمار« كي»يمكننا تعزيز اإلنتاجية من خالل زيادة

▪ .وبما أن الموارد شحيحة ، فإن إنتاج المزيد من رأس المال يتطلب إنتاج سلع استهالكية أقل

▪ .هذا االدخار اإلضافي يمول إنتاج السلع االستثمارية. زيادة االدخار= تقليل االستهالك

(More details in the next chapter.)

▪ Hence, a tradeoff between current and future consumption.

▪ وبالتالي ، فإن المقايضة بين االستهالك الحالي والمستقبلي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Diminishing Returns and the Catch-Up Effect

▪ The govt can implement policies that raise saving and investment.

(Details in next chapter.) Then K will rise, causing productivity and living standards to rise.

▪ تستطيع الحكومة تنفيذ سياسات تزيد من االدخار واالستثمار ▪ ، مما يؤدي إلى ارتفاع اإلنتاجية ومستويات المعيشة« كي»ثم سوف يرتفع

▪ But this faster growth is temporary,

due to diminishing returns to capital:

As K rises, the extra output from an additional unit of K falls….

▪ ، «كي»مع ارتفاع : لكن هذا النمو األسرع مؤقت ، بسبب تناقص العائدات إلى رأس المال ....»كي »ينخفض الناتج اإلضافي من وحدة إضافية من

Output per worker

(productivity)

The Production Function & Diminishing Returns

K/L

Y/L

Capital per worker

If workers

have little K,

giving them more

increases their

productivity a lot.

If workers already

have a lot of K,

giving them more

increases

productivity

fairly little.

the property whereby poor countries

tend to grow more rapidly than rich ones تميل الدول الفقيرة إلى النمو بسرعة أكبر من تلك الغنيةالملكيه حيث : تأثير االلتقاط

The catch-up effect:

K/L

Y/L

Poor country

starts here Rich country starts here

Poor country’s growth

Rich country’s growth

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Example of the Catch-Up Effect

▪ Over 1960–1990, the U.S. and S. Korea devoted

a similar share of GDP to investment, so you

might expect they would have similar growth

performance.

▪ But growth was >6% in Korea and only 2% in

the U.S.

▪ Explanation: the catch-up effect.

In 1960, K/L was far smaller in Korea than

in the U.S., hence Korea grew faster.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Investment from Abroadاالستثمار من الخارج

▪ To raise K/L and hence productivity, wages, and living standards,

the govt can also encourage ▪ اإلنتاجية ، واألجور ، ومستويات المعيشة ، يمكن للحكومة أيًضا ل وبالتالي /كمن أجل رفع معدل

تشجعأن

▪ foreign direct investment: a capital investment (e.g., a factory) that is owned & operated by a foreign entity

▪ أجنبييملكه ويديره كيان ( على سبيل المثال ، مصنع)استثمار رأسمالي : االستثمار األجنبي المباشر

▪ foreign portfolio investment:

a capital investment financed with foreign money but operated by domestic residents

▪ استثمار رأس المال يتم تمويله بمال أجنبي ولكن يتم تشغيله من قبل : االستثمار في المحافظ األجنبية المحليينالمقيمين

▪ Some of the returns from these investments flow back to the foreign

countries that supplied the funds. تعود بعض عائدات هذه االستثمارات إلى الدول .األجنبية التي زودت هذه األموال

Investment from Abroad

▪ Especially beneficial in poor countries that cannot

generate enough saving to fund investment

projects themselves.

• مفيدة بشكل خاص في البلدان الفقيرة التي ال تستطيع توليد ما يكفي من .االدخار لتمويل المشاريع االستثمارية نفسها

▪ Also helps poor countries learn state-of-the-art

technologies developed in other countries.

• كما يساعد البلدان الفقيرة على تعلم أحدث التقنيات المتقدمة في البلدان .األخرى

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Education

▪ Govt can increase productivity by promoting education–investment in

human capital (H).

▪ Public schools, subsidized loans for college

▪ يمكن للحكومة زيادة اإلنتاجية من خالل تشجيع التعليم واالستثمار في رأس المال البشري ▪ المدارس العامة ، والقروض المدعومة للكلية

▪ Education has significant effects: In the U.S., each year of schooling raises

a worker’s wage by 10%.

▪ .٪10في الواليات المتحدة ، كل سنة من التعليم ترفع أجور العامل بنسبة : التعليم له آثار مهمة

▪ But investing in H also involves a tradeoff between the present & future:

Spending a year in school requires sacrificing a year’s wages now to have higher wages later.

▪ يتطلب قضاء عام في : أيًضا على مقايضة بين الحاضر والمستقبلينطوي . «إتش»لكن االستثمار في .المدرسة التضحية بأجور العام اآلن للحصول على أجور أعلى الحقًا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Health and Nutritionالصحة والتغذية

▪

Property Rights and Political Stability حقوق الملكية واالستقرار السياسي

• Recall: Markets are usually a good way to organize economic

activity. األسواق عادة ما تكون وسيلة جيدة لتنظيم النشاط االقتصادي ▪

The price system allocates resources

to their most efficient uses. • .يخصص نظام األسعار الموارد الستخداماتها األكثر كفاءة

▪ This requires respect for property rights, the ability of

people to exercise authority over the resources they

own.

• وهذا يتطلب احترام حقوق الملكية ، وقدرة الناس على ممارسة السلطة على الموارد التي .يمتلكونها

Property Rights and Political Stability

▪ In many poor countries, the justice system doesn’t work very well: ▪ Contracts aren’t always enforced

▪ Fraud, corruption often go unpunished

▪ In some, firms must bribe govt officials for permits

– :في العديد من الدول الفقيرة ، ال يعمل نظام العدالة بشكل جيد

– العقود ال يتم تطبيقها دائًما – الغش ، الفساد غالباً ما يفلت من العقاب

– في البعض ، يجب على الشركات رشوة المسؤولين الحكوميين للحصول على تصاريح

▪ Political instability (e.g., frequent coups) creates uncertainty over whether property rights will be protected in the future.

• يخلق حالة من عدم اليقين بشأن ( على سبيل المثال ، االنقالبات المتكررة)عدم االستقرار السياسي .ما إذا كانت حقوق الملكية ستتم حمايتها في المستقبل

Property Rights and Political Stability

▪ When people fear their capital may be stolen by criminals or

confiscated by a corrupt govt, there is less investment, including from abroad, and the economy functions less efficiently.

Result: lower living standards. • عندما يخشى الناس من سرقة رأس المال من قبل المجرمين أو مصادرة من قبل الحكومة الفاسدة

: النتيجة. ، يكون هناك استثمارات أقل ، بما في ذلك من الخارج ، واالقتصاد يعمل بكفاءة أقل انخفاض مستويات المعيشة

▪ Economic stability, efficiency, and healthy growth require law

enforcement, effective courts, a stable constitution, and honest govt

officials.

• يتطلب االستقرار االقتصادي والكفاءة والنمو الصحي إنفاذ القانون والمحاكم الفعالة والدستور المستقر ومسؤولين حكوميين صادقين

Free Trade

▪ Inward-oriented policies

(e.g., tariffs, limits on investment from abroad) aim to raise living standards by avoiding interaction with other countries.

• على سبيل المثال ، التعريفات الجمركية وحدود االستثمار من )الموجهة نحو الداخل السياسات .إلى رفع مستويات المعيشة عن طريق تجنب التفاعل مع الدول األخرىتهدف (الخارج

▪ Outward-oriented policies (e.g., the elimination of restrictions on

trade or foreign investment) promote integration with the world

economy.

• على سبيل المثال ، إزالة القيود المفروضة على التجارة أو )السياسات الموجهة نحو الخارج تعزز التكامل مع االقتصاد العالمي( االستثمار األجنبي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Free Trade

▪ Recall: Trade can make everyone better off.

▪ Trade has similar effects as discovering new technologies—it improves productivity and living standards.

▪ .فهي تحسن اإلنتاجية ومستويات المعيشة -تتمتع التجارة بتأثيرات مماثلة مثل اكتشاف التقنيات الجديدة

▪ Countries with inward-oriented policies have generally failed to

create growth.

▪ e.g., Argentina during the 20th century

▪ .فشلت الدول التي لديها سياسات موجهة نحو الداخل بشكل عام في خلق النمو

▪ .على سبيل المثال ، األرجنتين خالل القرن العشرين .

▪ Countries with outward-oriented policies have often succeeded. e.g., South Korea, Singapore, Taiwan after 1960.

▪ .غالباً ما نجحت البلدان ذات السياسات الموجهة نحو الخارج

▪ .1960على سبيل المثال ، كوريا الجنوبية وسنغافورة وتايوان بعد عام

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Research and Development

▪ Technological progress is the main reason why living standards rise

over the long run. التقدم التكنولوجي هو السبب الرئيسي وراء ارتفاع مستويات المعيشة على .المدى الطويل

▪ One reason is that knowledge is a public good: Ideas can be shared freely, increasing the productivity of many.

▪ .يمكن تقاسم األفكار بحرية ، وزيادة إنتاجية الكثيرين: أحد األسباب هو أن المعرفة هي سلعة عامة

▪ Policies to promote tech. progress: التقدم : سيايات لتعزيز التكنولوجيا

▪ Patent laws قوانين براءات االختراع ▪ Tax incentives or direct support for private sector R&D

▪ والتطويرالحوافز الضريبية أو الدعم المباشر للقطاع الخاص للبحث

▪ Grants for basic research at universities

▪ منح للبحوث األساسية في الجامعات

Population Growth

…may affect living standards in 3 different ways: مختلفةطرق 3قد تؤثر على مستويات المعيشة في

1. Stretching natural resources تمدد الموارد الطبيعية ▪ 200 years ago, Malthus argued that pop. growth would

strain society’s ability to provide for itself.

▪ Since then, the world population has increased sixfold. If

Malthus was right, living standards would have fallen.

Instead, they’ve risen.

▪ Malthus failed to account for technological progress and

productivity growth.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Population Growth

2. Diluting the capital stock تمييع مخزون رأس المال

▪ Bigger population = higher L = lower K/L

= lower productivity & living standards.

▪ This applies to H as well as K:

fast pop. growth = more children

= greater strain on educational system.

▪ Countries with fast pop. growth tend to have lower

educational attainment.

▪ النمو يميل إلى أن يكون التحصيل العلمي . الدول ذات التعداد السكاني السريع .أقل

▪

Population Growth

To combat this, many developing countries use policy to control

population growth.

▪ China’s one child per family laws

▪ Contraception education & availability

▪ Promote female literacy to raise opportunity cost of having babies

– .لمكافحة هذا ، يستخدم العديد من البلدان النامية سياسة للتحكم في النمو السكاني

– قانون الطفل الواحد لكل أسرة في الصين

– تعليم منع الحمل وتوافره

– تعزيز محو األمية بين اإلناث لزيادة تكلفة الفرصة البديلة إلنجاب األطفال

2. Diluting the capital stock

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Population Growth

3. Promoting tech. progressتعزيز التكنولوجيا. التقدم ▪ More people

= more scientists, inventors, engineers

= more frequent discoveries

= faster tech. progress & economic growth المزيد من الناس

مزيد من العلماء والمخترعين والمهندسين=

المزيد من االكتشافات المتكررة=

التقدم والنمو االقتصادي. تكنولوجيا اسرع=

▪ Evidence from Michael Kremer:

Over the course of human history,

▪ growth rates increased as the world’s population increased

▪ more populated regions grew faster than

less populated ones

▪ على مدار تاريخ البشرية ،: أدلة من مايكل كريمر

▪ زادت معدالت النمو مع زيادة عدد سكان العالم

▪ نمت المناطق األكثر ازدحاًما بالسكان بمعدل أسرع من المناطق األقل سكانية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Review productivity concepts

▪ List the determinants of productivity.

▪ .اإلنتاجيةعدد محددات

▪ List three policies that attempt to raise living

standards by increasing one of the determinants

of productivity.

▪ اذكر ثالث سياسات تحاول رفع مستويات المعيشة عن طريق زيادة .أحد محددات اإلنتاجية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Determinants of productivity:

K/L, physical capital per worker

H/L, human capital per worker

N/L, natural resources per worker

A, technological knowledge

Policies to boost productivity:

▪ Encourage saving and investment, to raise K/L

▪ Encourage investment from abroad, to raise K/L

▪ Provide public education, to raise H/L

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Determinants of productivity:

K/L, physical capital per worker

H/L, human capital per worker

N/L, natural resources per worker

A, technological knowledge

Policies to boost productivity:

▪ Patent laws or grants, to increase A

▪ Control population growth, to increase K/L

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Are Natural Resources a Limit to Growth?

▪ Some argue that population growth is depleting the Earth’s non-

renewable resources, and thus will limit growth in living standards.

▪ But technological progress often yields ways to avoid these limits:

▪ Hybrid cars use less gas.

▪ Better insulation in homes reduces the energy required to heat or cool them.

▪ As a resource becomes scarcer, its market price rises, which increases the incentive to conserve it and develop alternatives.

▪ يزعم البعض أن النمو السكاني يستنزف موارد األرض غير المتجددة ، وبالتالي سيحد من النمو في .مستويات المعيشة

▪ :لكن التقدم التكنولوجي غالباً ما يسفر عن طرق لتجنب هذه الحدود

▪ .السيارات الهجينة تستخدم كميات أقل من الغاز

▪ .يعمل العزل األفضل في المنازل على تقليل الطاقة المطلوبة لتسخينها أو تبريدها

▪ .عندما يصبح المورد أكثر ندرة ، يرتفع سعره في السوق ، مما يزيد من الحافز للحفاظ عليه وتطوير البدائل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ In the long run, living standards are determined by

productivity.

▪ Policies that affect the determinants of productivity

will therefore affect the next generation’s living standards.

▪ One of these determinants is saving and

investment.

▪ In the next chapter, we will learn how saving and

investment are determined, and how policies can

affect them.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• There are great differences across countries in living standards and

growth rates. • .هناك اختالفات كبيرة بين الدول في مستويات المعيشة ومعدالت النمو

• Productivity (output per unit of labor) is the main determinant of

living standards in the long run.

• الطويلهي المحدد الرئيسي لمستويات المعيشة على المدى ( اإلنتاج لكل وحدة عمل)اإلنتاجية

• Productivity depends on physical and human capital per worker,

natural resources per worker, and technological knowledge.

• تعتمد اإلنتاجية على رأس المال المادي والبشري لكل عامل ، والموارد الطبيعية لكل عامل ، والمعرفة التكنولوجية

• Growth in these factors—especially technological progress—causes

growth in living standards over the long run. وخاصة التقدم -النمو في هذه العوامل .يؤدي إلى نمو مستويات المعيشة على المدى الطويل -التكنولوجي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Policies can affect the following, each of which has important effects on growth: :تؤثر السياسات على ما يلي ، لكل منها تأثيرات مهمة على النموأن يمكن

• Saving and investment االدخار واالستثمار • International trade التجاره العالميه • Education, health & nutrition التعليم والصحه والتغذيه • Property rights and political stability حقوق الملكيه واالستقرار السياسي

• Research and development البحث والتطوير • Population growth النمو السكاني

• Because of diminishing returns to capital, growth from investment eventually slows down, and poor countries may “catch up” to rich ones.

• وبسبب تناقص العائد على رأس المال ، فإن النمو من االستثمار يتباطأ في نهاية المطاف ، ويمكن .بالبلدان الغنية" اللحاق"للبلدان الفقيرة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are the main types of financial institutions

in the U.S. economy, and what is their function?

• What are the three kinds of saving?

• What’s the difference between saving and investment?

• How does the financial system coordinate saving

and investment?

• How do govt policies affect saving, investment,

and the interest rate?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Financial Institutions

▪ The financial system: the group of institutions that helps match the saving

of one person with the investment of another. ▪ آخرمجموعة المؤسسات التي تساعد في مطابقة إنقاذ شخص واحد باستثمار شخص : النظام المالي

▪ Financial markets: institutions through which savers can directly provide funds to

borrowers. Examples:

▪ :أمثلة. المؤسسات التي يمكن من خاللها للمدخرين تقديم األموال مباشرة إلى المقترضين: األسواق المالية

▪ The Bond Market. سوق السندات

A bond is a certificate of indebtedness. السند هو شهادة المديونية

▪ The Stock Market. سوق االسهم

A stock is a claim to partial ownership in a firm. السهم هو ملكية جزئية في شركة

Financial Institutions

▪ Financial intermediaries: institutions through which savers can indirectly

provide funds to borrowers. Examples:

• . المؤسسات التي يمكن من خاللها للمدخرين توفير األموال للمقترضين بشكل غير مباشر: الوسطاء الماليون :أمثلة

▪ Banks

▪ Mutual funds – institutions that sell shares to the public and use the

proceeds to buy portfolios of stocks and bonds

– المؤسسات التي تبيع األسهم للجمهور وتستخدم العائدات لشراء محافظ األوراق -الصناديق المشتركة المالية والسندات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: Elements of Financial Crises

▪ Large decline in some asset prices

▪ 2008–2009: Housing prices fell 30%.

▪ Insolvencies at financial institutions

▪ 2008–2009:

Banks and other institutions failed when many

homeowners stopped paying their mortgages.

▪ Decline in confidence in financial institutions

▪ 2008–2009:

Customers with uninsured deposits began

pulling their funds out of financial institutions.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: Elements of Financial Crises

▪ Credit crunch

▪ 2008–2009: Borrowers unable to get loans

because troubled lenders not confident in

borrowers’ credit-worthiness.

▪ Economic downturn

▪ 2008–2009: Failing financial institutions and a

fall in investment caused GDP to fall and

unemployment to rise.

▪ Vicious circle

▪ 2008–2009: The downturn reduced profits and

asset values, which worsened the crisis.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Different Kinds of Saving

Private saving االدخار الخاص = The portion of households’ income that is not used for consumption or

paying taxes

نسبة دخل األسر المعيشية التي ال تستخدم في االستهالك أو دفع الضرائب

= Y – T – C

Public saving االدخار العام = Tax revenue less government spending

ناقص اإلنفاق الحكومياإليرادات الضريبية

= T – G

National Saving

National saving االدخار القومي = private saving + public saving

= (Y – T – C) + (T – G)

= Y – C – G

= the portion of national income that is not used

for consumption or government purchases

جزء من الدخل القومي الذي ال يستخدم لالستهالك أو المشتريات الحكومية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Saving and Investment

Recall the national income accounting identity: القوميهوية محاسبة الدخل : تذكير

Y = C + I + G + NX

For the rest of this chapter, focus on the closed

economy case:

Y = C + I + G

Solve for I: I = Y – C – G = (Y – T – C) + (T – G)

Saving = investment in a closed economy

national saving

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Budget Deficits and Surpluses

Budget surplus فائض الميزانيه = an excess of tax revenue over govt spending

الحكوميزيادة في عائدات الضرائب على اإلنفاق

= T – G

= public saving

Budget deficit عجز الميزانيه

= a shortfall of tax revenue from govt spending

الحكومينقص في عائدات الضرائب من اإلنفاق

= G – T

= – (public saving)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

A. Calculations

▪ Suppose GDP equals $10 trillion,

consumption equals $6.5 trillion,

the government spends $2 trillion

and has a budget deficit of $300 billion.

▪ Find public saving, taxes, private saving,

national saving, and investment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

A. Calculations

▪ Suppose GDP equals $10 trillion,

consumption equals $6.5 trillion,

the government spends $2 trillion

and has a budget deficit of $300 billion.

▪ Find public saving, taxes, private saving,

national saving, and investment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers, part A

Given:

Y = 10.0, C = 6.5, G = 2.0, G – T = 0.3

Public saving = T – G = – 0.3

Taxes: T = G – 0.3 = 1.7

Private saving = Y – T – C = 10 – 1.7 – 6.5 = 1.8

National saving = Y – C – G = 10 – 6.5 = 2 = 1.5

Investment = national saving = 1.5

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

B. How a tax cut affects saving

▪ Use the numbers from the preceding exercise,

but suppose now that the government cuts taxes

by $200 billion.

▪ In each of the following two scenarios,

determine what happens to public saving,

private saving, national saving, and investment.

1. Consumers save the full proceeds of the tax cut.

2. Consumers save 1/4 of the tax cut and spend the other 3/4.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers, part B

In both scenarios, public saving falls by

$200 billion, and the budget deficit rises

from $300 billion to $500 billion.

1. If consumers save the full $200 billion,

national saving is unchanged,

so investment is unchanged.

2. If consumers save $50 billion and spend $150

billion, then national saving and investment

each fall by $150 billion.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

C. Discussion questions

The two scenarios from this exercise were:

1. Consumers save the full proceeds of the

tax cut.

2. Consumers save 1/4 of the tax cut and spend

the other 3/4.

▪ Which of these two scenarios do you think is

more realistic?

▪ Why is this question important?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Meaning of Saving and Investment

▪ Private saving is the income remaining after households pay their

taxes and pay for consumption. ▪ االستهالكاالدخار الخاص هو الدخل المتبقي بعد أن تدفع األسر ضرائبها وتكاليف

▪ Examples of what households do with saving:

▪ االدخارأمثلة على ما تفعله األسر مع

▪ Buy corporate bonds or equities

▪ األسهمشراء سندات الشركات أو

▪ Purchase a certificate of deposit at the bank

▪ البنكشراء شهادة اإليداع في

▪ Buy shares of a mutual fund

▪ مشتركشراء أسهم صندوق

▪ Let accumulate in saving or checking accounts

▪ في المدخرات أو التحقق من الحساباتيدعونها تتراكم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Meaning of Saving and Investment

▪ Investment is the purchase of new capital. ▪ جديداالستثمار هو شراء رأس مال

▪ Examples of investment:

▪ General Motors spends $250 million to build

a new factory in Flint, Michigan.

▪ You buy $5000 worth of computer equipment for your business.

▪ Your parents spend $300,000 to have a new house built.

Remember: In economics, investment is NOT

the purchase of stocks and bonds!

!في االقتصاد ، االستثمار ليس شراء األسهم والسندات: تذكر

The Market for Loanable Funds

▪ A supply–demand model of the financial system

▪ Helps us understand

▪ how the financial system coordinates

saving & investment

▪ how govt policies and other factors affect saving, investment, the interest rate

– نموذج العرض والطلب في النظام المالي – يساعدنا على فهم – كيف ينسق النظام المالي؟ االدخار واالستثمار

– كيف تؤثر سياسات الحكومة وعوامل أخرى على االدخار واالستثمار وسعر الفائدة

The Market for Loanable Funds

Assume: only one financial market

▪ All savers deposit their saving in this market.

▪ All borrowers take out loans from this market.

▪ There is one interest rate, which is both the return to

saving and the cost of borrowing.

– سوق مالية واحدة فقط: افترض

– .جميع المدخرين إيداع مدخراتهم في هذا السوق

– .جميع المقترضين يحصلون على قروض من هذا السوق

– هناك سعر فائدة واحد ، وهو العودة إلى االدخار وتكلفة االقتراض

The Market for Loanable Funds

The supply of loanable funds comes from saving:

▪ Households with extra income can loan it out and earn

interest.

▪ Public saving, if positive, adds to national saving and

the supply of loanable funds.

If negative, it reduces national saving and the supply of

loanable funds.

:يأتي توفير األموال القابلة للقرض من االدخار

.يمكن لألسر ذات الدخل اإلضافي إقراضها وكسب الفائدة

االدخار العام ، إذا كان إيجابيا ، يضيف إلى االدخار الوطني وإمدادات األموال .القابلة للقرض

.إذا كان سلبيا ، فإنه يقلل من االدخار الوطني وإمدادات األموال القابلة للقرض

The Slope of the Supply Curve

Interest Rate

Loanable Funds ($billions)

Supply

An increase in the interest rate

makes saving

more attractive, which increases

the quantity of

loanable funds

supplied.

The Market for Loanable Funds The demand for loanable funds comes from

investment:

▪ Firms borrow the funds they need to pay for

new equipment, factories, etc.

▪ Households borrow the funds they need to

purchase new houses.

The Slope of the Demand Curve

Interest Rate

Loanable Funds ($billions)

Demand

A fall in the interest rate reduces the cost

of borrowing, which

increases the quantity of loanable funds

demanded.

Equilibrium

Interest Rate

Loanable Funds ($billions)

Demand

The interest rate adjusts to equate

supply and demand. Supply

The eq’m quantity of L.F. equals

eq’m investment and eq’m saving.

Policy 1: Saving Incentives

Interest Rate

Loanable Funds ($billions)

Tax incentives for saving increase

the supply of L.F. S1

…which reduces the eq’m interest rate

and increases the eq’m quantity of L.F.

Policy 2: Investment Incentives

Interest Rate

Loanable Funds ($billions)

An investment tax credit increases the

demand for L.F. S1

…which raises the eq’m interest rate

and increases the eq’m quantity of L.F.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Budget deficits

▪ Use the loanable funds model to analyze

the effects of a government budget deficit:

▪ Draw the diagram showing the initial

equilibrium.

▪ Determine which curve shifts when the

government runs a budget deficit.

▪ Draw the new curve on your diagram.

▪ What happens to the equilibrium values of the

interest rate and investment?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Interest Rate

Loanable Funds ($billions)

A budget deficit reduces

national saving and the

supply of L.F. S1

…which increases the eq’m interest rate

and decreases the eq’m quantity of L.F. and investment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Budget Deficits, Crowding Out,

and Long-Run Growth

▪ Our analysis: Increase in budget deficit causes fall in investment.

The govt borrows to finance its deficit,

leaving less funds available for investment. This is called crowding out.

.زيادة في عجز الميزانية يسبب انخفاض االستثمار

.تقترض الحكومة لتمويل عجزها ، مما يترك أقل األموال المتاحة لالستثمار هذا يسمى المزاحمة

▪ Recall from the preceding chapter: Investment is important for long-run

economic growth.

Hence, budget deficits reduce the economy’s growth rate and future

standard of living.

▪ وبالتالي ، فإن العجز في الميزانية يقلل من معدل نمو . االستثمار مهم للنمو االقتصادي على المدى الطويل االقتصاد ومستوى المعيشة في المستقبل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The U.S. Government Debt

▪ The government finances deficits by borrowing

(selling government bonds).

▪ Persistent deficits lead to a rising govt debt.

▪ The ratio of govt debt to GDP is a useful

measure of the government’s indebtedness relative to its ability to raise tax revenue.

▪ Historically, the debt-GDP ratio usually rises

during wartime and falls during peacetime—until

the early 1980s.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ Like many other markets, financial markets are

governed by the forces of supply and demand.

▪ One of the Ten Principles from Chapter 1:

Markets are usually a good way

to organize economic activity.

Financial markets help allocate the economy’s scarce resources to their most efficient uses.

▪ Financial markets also link the present to the future:

They enable savers to convert current income into

future purchasing power, and borrowers to acquire

capital to produce goods and services in the future.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The U.S. financial system is made up of many types of financial

institutions, like the stock and bond markets, banks, and mutual funds.

• يتكون النظام المالي في الواليات المتحدة من عدة أنواع من المؤسسات المالية ، مثل أسواق األسهم والسندات .، والبنوك ، وصناديق االستثمار المشتركة

• National saving equals private saving plus public saving.

• .يساوي االدخار الخاص باإلضافة إلى المدخرات العامةاالدخارالوطني

• In a closed economy, national saving equals investment. The financial system makes this happen.

• .النظام المالي يجعل هذا يحدث. في اقتصاد مغلق ، فإن االدخار الوطني يساوي االستثمار

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The supply of loanable funds comes from saving. The demand for

funds comes from investment. The interest rate adjusts to balance supply and demand in the loanable funds market.

• يتم . يأتي الطلب على األموال من االستثمار. العرض من األموال القابلة للقرض يأتي من االدخار تعديل سعر الفائدة لموازنة العرض والطلب في سوق األموال القابلة لإلقراض

• A government budget deficit is negative public saving, so it reduces

national saving, the supply of funds available to finance investment.

• العجز في الموازنة الحكومية هو توفير عام سلبي ، وبالتالي يقلل من االدخار الوطني ، وتوفير .األموال المتاحة لتمويل االستثمار

• When a budget deficit crowds out investment, it reduces the growth of productivity and GDP.

• .عندما يخرج عجز الميزانية عن االستثمار ، فإنه يقلل من نمو اإلنتاجية والناتج المحلي اإلجمالي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Policy 3: Govt Budget Deficits

Interest Rate

Loanable Funds ($billions)

A budget deficit reduces national saving and the

supply of L.F. S1

…which increases the eq’m interest rate

and decreases the eq’m quantity of L.F.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What is “present value”? How can we use it to compare sums of money from different times?

• Why are people risk averse?

How can risk-averse people use insurance

and diversification to manage risk?

• What determines the value of an asset?

What is the “efficient markets hypothesis”? Why is beating the market nearly impossible?

Introduction

▪ The financial system coordinates saving

and investment. • .يقوم النظام المالي بتنسيق االدخار واالستثمار

▪ Participants in the financial system make decisions regarding the

allocation of resources over time and the handling of risk.

• .يتخذ المشاركون في النظام المالي قرارات تتعلق بتخصيص الموارد مع مرور الوقت ومعالجة المخاطر

▪ Finance is the field that studies such decision making.

• .التمويل هو المجال الذي يدرس مثل هذا القرار

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Present Value: The Time Value of Money

▪ To compare sums from different times, we use the concept of

present value. ▪ الحاليةلمقارنة المبالغ من أوقات مختلفة ، نستخدم مفهوم القيمة

▪ The present value of a future sum: the amount that would be

needed today to yield that future sum at prevailing interest rates

▪ المبلغ المطلوب اليوم للحصول على هذا المبلغ المستقبلي بأسعار : القيمة الحالية للمبلغ المستقبلي السائدةالفائدة

▪ Related concept: The future value of a sum: the amount the sum will be worth at a

given future date, when allowed to earn interest at the prevailing rate

▪ المبلغ الذي يستحقه المبلغ في تاريخ مستقبلي معين ، عندما يُسمح : القيمة المستقبلية للمبلغ: المفهوم ذو الصلة له بربح الفائدة بالسعر السائد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE 1: A Simple Deposit

▪ Deposit $100 in the bank at 5% interest.

What is the future value (FV) of this amount?

▪ In N years, FV = $100(1 + 0.05)N

▪ In three years, FV = $100(1 + 0.05)3 = $115.76

▪ In two years, FV = $100(1 + 0.05)2 = $110.25

▪ In one year, FV = $100(1 + 0.05) = $105.00

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE 1: A Simple Deposit

▪ Deposit $100 in the bank at 5% interest.

What is the future value (FV) of this amount?

▪ In N years, FV = $100(1 + 0.05)N

▪ In this example, $100 is the present value (PV).

▪ In general, FV = PV(1 + r )N

where r denotes the interest rate (in decimal form).

▪ Solve for PV to get: PV = FV/(1 + r )N

EXAMPLE 2: Investment Decision

▪ Suppose r = 0.06.

Should General Motors spend $100 million to build

a factory that will yield $200 million in ten years?

Solution:

Find present value of $200 million in 10 years:

PV = ($200 million)/(1.06)10 = $112 million

Since PV > cost of factory, GM should build it.

Present value formula: PV = FV/(1 + r )N

EXAMPLE 2: Investment Decision

▪ Instead, suppose r = 0.09.

Should General Motors spend $100 million to build

a factory that will yield $200 million in ten years?

Solution:

Find present value of $200 million in 10 years:

PV = ($200 million)/(1.09)10 = $84 million

Since PV < cost of factory, GM should not build it.

Present value helps explain why مهم

investment falls when the interest rate rises. تساعد القيمة الحالية في تفسير سبب انخفاض االستثمار عندما يرتفع سعر الفائدة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Present value

You are thinking of buying a six-acre lot for $70,000.

The lot will be worth $100,000 in five years.

A. Should you buy the lot if r = 0.05?

B. Should you buy it if r = 0.10?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

You are thinking of buying a six-acre lot for $70,000.

The lot will be worth $100,000 in five years.

A. Should you buy the lot if r = 0.05?

PV = $100,000/(1.05)5 = $78,350.

PV of lot > price of lot.

Yes, buy it.

B. Should you buy it if r = 0.10?

PV = $100,000/(1.1)5 = $62,090.

PV of lot < price of lot.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Compounding

▪ Compounding: the accumulation of a sum of money where the

interest earned on the sum earns additional interest ▪ تراكم مبلغ من المال حيث تكتسب الفائدة المكتسبة على المبلغ فائدة إضافية: المضاعفه

▪ Because of compounding, small differences in interest rates lead to

big differences over time.

▪ تؤدي االختالفات الصغيرة في أسعار الفائدة إلى اختالفات كبيرة مع مرور المضاعفه، بسبب الوقت

▪ Example: Buy $1000 worth of Microsoft stock, hold for 30 years.

If rate of return = 0.08, FV = $10,063

If rate of return = 0.10, FV = $17,450

The Rule of 70

▪ The Rule of 70: If a variable grows at a rate of x percent per year, that variable will

double in about 70/x years. • س / 70المئة سنويا ، فإن هذا المتغير سوف يتضاعف في حوالي س في إذا كان المتغير ينمو بمعدل

سنوات

▪ Example:

▪ If interest rate is 5%, a deposit will double in about 14 years.

▪ If interest rate is 7%, a deposit will double in about 10 years.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Risk Aversion

▪ Most people are risk averse—they dislike uncertainty.

▪ .فهم يكرهون عدم اليقين -معظم الناس يكرهون المخاطرة

▪ Example: You are offered the following gamble.

Toss a fair coin.

▪ If heads, you win $1000.

▪ If tails, you lose $1000.

Should you take this gamble?

▪ If you are risk averse, the pain of losing $1000

would exceed the pleasure of winning $1000,

and both outcomes are equally likely,

so you should not take this gamble.

The Utility Function

Wealth

Utility

Current wealth

Current utility

Utility is a

subjective measure

of well-being

that depends on

wealth.

المنفعة هي مقياس ذاتي .للرفاهية يعتمد على الثروة

As wealth rises, the curve becomes

flatter due to diminishing

marginal utility:

the more wealth a person has, the

less extra utility he would get from

an extra dollar.

مع ارتفاع الثروة ، يصبح المنحنى أكثر انبساطًا بسبب :تناقص المنفعة الحدية

، كلما قلت فائدته اإلضافية ثروة الشخص كلما ازدادت .من دوالر إضافي

The Utility Function and Risk Aversion

Because of diminishing marginal utility,

a $1000 loss reduces

utility more than a $1000 gain increases it.

Wealth

Utility

–1000 +1000

Utility loss from losing

$1000

Utility gain from winning $1000

Managing Risk With Insurance

▪ How insurance works:

A person facing a risk pays a fee to the

insurance company, which in return accepts

part or all of the risk.

▪ Insurance allows risks to be pooled,

and can make risk averse people better off:

E.g., it is easier for 10,000 people to each bear

1/10,000 of the risk of a house burning down

than for one person to bear the entire risk alone.

Two Problems in Insurance Markets 1. Adverse selection:

A high-risk person benefits more from insurance, so is more likely to

purchase it.

2. .يستفيد الشخص األكثر عرضة للمخاطر من التأمين ، لذلك فمن المرجح أن يقوم بشرائه: االختيار المعاكس 3.

2. Moral hazard:

People with insurance have less incentive to avoid risky behavior.

3. .لدى األشخاص الذين لديهم تأمين حافز أقل لتجنب السلوك المحفوف بالمخاطر: الخطر األخالقي

Insurance companies cannot fully guard against these problems, so they

must charge higher prices.

.ال يمكن لشركات التأمين أن تحمي هذه المشاكل بشكل كامل ، لذا يجب عليها فرض أسعار أعلى

As a result, low-risk people sometimes forego insurance and lose the benefits

of risk-pooling.

ونتيجة لذلك ، يتخلى األشخاص ذوو المخاطر المنخفضة في بعض األحيان عن التأمين ويفقدون فوائد تجميع المخاطر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Adverse selection or moral hazard?

Identify whether each of the following is an example of adverse selection or moral hazard.

A. Joe begins smoking in bed after buying fire

insurance.

B. Both of Susan’s parents lost their teeth to gum disease, so Susan buys dental insurance.

C. When Gertrude parks her Corvette convertible,

she doesn’t bother putting the top up, because her insurance covers theft of any items left in the car.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

A. Joe begins smoking in bed after buying fire insurance.

moral hazard

B. Both of Susan’s parents lost their teeth to gum disease, so Susan buys dental insurance.

adverse selection

C. When Gertrude parks her Corvette convertible, she doesn’t bother putting the top up, because her insurance covers theft of any items left in the car.

moral hazard

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Measuring Risk

▪ We can measure risk of an asset with the

standard deviation, a statistic that measures a

variable’s volatility—how likely it is to fluctuate.

▪ The higher the standard deviation of the asset’s return, the greater the risk.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Reducing Risk Through Diversification

▪ Diversification reduces risk by replacing a single risk with a large number

of smaller, unrelated risks.

▪ .يقلل التنويع من المخاطر عن طريق استبدال خطر واحد بعدد كبير من المخاطر األصغر غير ذات الصلة

▪ A diversified portfolio contains assets whose returns are not strongly

related: تحتوي المحفظة المتنوعة على أصول ال ترتبط عائداتها بقوة:

▪ Some assets will realize high returns,

others low returns. ، عائدات أخرى منخفضة"بعض األصول سوف تحقق عائدات عالية

▪ The high and low returns average out, so the portfolio is likely to

earn an intermediate return more consistently than any of the assets it contains.

▪ ويعود متوسط العوائد المرتفعة والمنخفضة ، وبالتالي من المرجح أن تحقق المحفظة عائداً وسيطًا أكثر ثباتًا من أي من األصول التي تحتويها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Reducing Risk Through Diversification

▪ Diversification can reduce firm-specific risk,

which affects only a single company.

▪ .يمكن التنويع تقليل المخاطر المحددة للشركة ، والتي تؤثر فقط على شركة واحدة

▪

▪ Diversification cannot reduce market risk,

which affects all companies in the stock market.

▪ ال يمكن التنويع يقلل من مخاطر السوق ، والتي تؤثر على جميع الشركات في سوق األوراق .المالية

▪

Reducing Risk Through Diversification

Increasing the number of stocks

reduces firm-specific risk.

زيادة عدد األسهم يقلل من المخاطر المحددة .للشركة

S ta

n d

a rd

d e

v o

f p

o rt

fo li

o r

e tu

# of stocks in portfolio

1 0

2 0

3 0

4 0

5 0

0 1 0

2 0

3 0

4 0

But

market

risk

remains. لكن مخاطر السوق ال تزال قائمة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Tradeoff Between Risk and Return

▪ Tradeoff:

Riskier assets pay a higher return, on average, to compensate for

the extra risk of holding them.

▪ تدفع الموجودات عالية المخاطر عائًدا أعلى ، في المتوسط ، للتعويض عن المخاطرة اإلضافية : المقايضة

المتمثلة في االحتفاظ بها

▪ E.g., over past 200 years, average real return on

stocks, 8%. On short-term govt bonds, 3%.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Tradeoff Between Risk and Return

▪ Example:

Suppose you are dividing your portfolio between

two asset classes.

▪ A diversified group of risky stocks:

average return = 8%, standard dev. = 20%

▪ A safe asset:

return = 3%, standard dev. = 0%

▪ The risk and return on the portfolio depends on the

percentage of each asset class in the portfolio…

The Tradeoff Between Risk and Return

Increasing

the share of stocks in

the portfolio increases

the average return but

also the risk.

زيادة حصة األسهم في الحافظة تزيد من متوسط العائد ولكن

.الخطر أيضا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Asset Valuation مهم

▪ When deciding whether to buy a company’s stock, you compare the price of the shares to the value of the company.

▪ ".قيمة الشركة"عند تحديد ما إذا كنت ستشتري أسهم الشركة ، فإنك تقارن سعر األسهم بـ

▪

▪ If share price > value, the stock is overvalued.

▪ If price < value, the stock is undervalued.

▪ If price = value, the stock is fairly valued

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Valuing a share of stock

If you buy a share of AT&T stock today,

▪ you will be able to sell it in 3 years for $30.

▪ you will receive a $1 dividend at the end of

each of those 3 years.

If the prevailing interest rate is 10%,

what is the value of a share of AT&T stock today?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

$30/(1.1)3 = $ 22.54 in 3 years $30

$1/(1.1)3 = $ 75 in 3 years $1

$1/(1.1)2 = $ 83 in 2 years $1

$1/(1.1) = $ 91 in 1 year $1

present value of

the amount

when you

will receive it

amount

you will

receive

The value of a share of AT&T stock equals the sum of the numbers in the last column: $25.03

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Asset Valuation

▪ Value of a share مهم

= PV of any dividends the stock will pay + PV of the price you get when you sell

the share

▪ = قيمة السهم PV من أي توزيعات أرباح سيدفعها السهم + PV من السعر الذي تحصل عليه عند بيع السهم

▪ Problem: When you buy the share, you don’t know what future dividends or

prices will be.

▪ المستقبليةعندما تشتري السهم ، فأنت ال تعرف ما هي األرباح أو األسعار : المشكلة

▪ One way to value a stock: fundamental analysis, the study of a

company’s accounting statements and future prospects to determine its value

البيانات المحاسبية للشركة واآلفاق المستقبلية دراسة التحليل األساسي ، : طريقة واحدة لتقييم األسهم لتحديد قيمتها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Show of hands survey

You have a brokerage account with Merrill Lynch.

Your broker calls you with a hot tip about a stock:

new information suggests that the company will be

highly profitable.

Should you buy stock in the company?

A. Yes

B. No

C. Not until you read the prospectus.

D. What’s a prospectus?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Efficient Markets Hypothesis

▪ Efficient Markets Hypothesis (EMH):

the theory that each asset price reflects all

publicly available information about the value of

the asset

• (فرضية األسواق الفعالة EMH): • النظرية القائلة بأن سعر كل أصل يعكس جميع المعلومات المتاحة

للجمهور حول قيمة األصل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Implications of EMH آثارEMH

1. Stock market is informationally efficient: Each stock price reflects all

available information about the value of the company. 2. المعلومات المتاحة عن قيمة الشركةيعكس جميع سعر سهم كل : سوق األوراق المالية ذو كفاءة إعالمية

2. Stock prices follow a random walk:

A stock price only changes in response to new information )“news”( about the company’s value. News cannot be predicted, so stock price movements should be impossible to predict.

3. ال . حول قيمة الشركة"( األخبار)"سعر السهم يتغير فقط استجابة للمعلومات الجديدة : تتبع أسعار األسهم السير العشوائي .يمكن التنبؤ باألخبار ، لذلك من المستحيل التنبؤ بحركات أسعار األسهم

3. It is impossible to systematically beat the market.

By the time the news reaches you, mutual fund managers will have already

acted on it.

4. في الوقت الذي تصل فيه األخبار إليك ، كان مديرو صناديق االستثمار . من المستحيل التغلب بشكل منهجي على السوق .المشترك قد تصرفوا بالفعل

Index Funds vs. Managed Funds

▪ An index fund is a mutual fund that buys all the

stocks in a given stock index.

▪ An actively managed mutual fund aims to buy

only the best stocks.

▪ Actively managed funds have higher expenses

than index funds.

▪ EMH implies that returns on actively managed

funds should not consistently exceed the returns

on index funds.

Index Funds vs. Managed Funds

.550

1.272

12.5

10.3

S&P SmallCap 600 (index fund)

Managed mid cap funds

.535

1.458

10.9

8.1

S&P MidCap 400 (index fund)

Managed mid cap funds

.351

1.020

6.2%

5.9

S&P 500 (index fund)

Managed large cap funds

2006

expense

ratio

2001–2006

annualized

return

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Market Irrationality

▪ Many believe that stock price movements are partly psychological:

▪ J.M. Keynes: stock prices driven by “animal spirits,” “waves of pessimism and optimism”

▪ Alan Greenspan: 1990s stock market boom due to “irrational exuberance”

▪ Bubbles occur when speculators buy overvalued assets expecting prices to rise further.

▪ The importance of departures from rational pricing is not known.

CONCLUSION

▪ This chapter has introduced some of the basic

tools people use when they make financial

decisions.

▪ The efficient markets hypothesis teaches that a

stock price should reflect the company’s expected future profitability.

▪ Fluctuations in the stock market have important

macroeconomic implications, which we will study

later in this course.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The present value of any future sum is the amount that would be

needed today, given prevailing interest rates, to produce that future sum.

• القيمة الحالية ألي مبلغ مستقبلي هي المبلغ الذي ستكون هناك حاجة إليه اليوم ، في ضوء أسعار الفائدة .السائدة ، إلنتاج ذلك المبلغ المستقبلي

• Because of diminishing marginal utility of wealth, most people are risk-

averse. Risk-averse people can manage risk with insurance, through

diversification, and by choosing a portfolio with a lower risk and lower

return.

• يمكن لألشخاص الذين يكرهون . بسبب تناقص المنفعة الحدية للثروة ، فإن معظم الناس يكرهون المخاطر المخاطر إدارة المخاطر من خالل التأمين ، من خالل التنويع ، ومن خالل اختيار محفظة ذات مخاطر أقل وعائد أقل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The value of an asset equals the present value of all payments its owner will

receive. For a share of stock, these payments include dividends plus the

final sale price.

• للحصول على حصة من األسهم ، . قيمة األصل تساوي القيمة الحالية لجميع المدفوعات التي يتلقاها مالكها .تشمل هذه المدفوعات أرباح األسهم باإلضافة إلى سعر البيع النهائي

• According to the efficient markets hypothesis, financial markets are

informationally efficient,

a stock price always equals the market’s best guess of the firm’s value, and stock prices follow a random walk as new information becomes available.

• ووفقاً لفرضية األسواق الفعالة ، فإن األسواق المالية تتسم بكفاءة إعالمية ، ويكافئ سعر السهم دائًما أفضل .تخمين للسوق لقيمة الشركة ، وتتبع أسعار األسهم مساًرا عشوائيًا كلما توفرت معلومات جديدة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Some economists question the efficient markets

hypothesis, and believe that irrational psychological

factors also influence asset prices.

• يشكك بعض االقتصاديين في فرضية األسواق الفعالة ، ويعتقدون أن العوامل

النفسية غير العقالنية تؤثر أيًضا على أسعار األصول

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How is unemployment measured?

• What is the “natural rate of unemployment”? • Why are there always some people

unemployed?

• How is unemployment affected by unions and

minimum wage laws?

• What is the theory of efficiency wages, and how

does it help explain unemployment?

Labor Force Statistics

▪ Produced by Bureau of Labor Statistics (BLS),

in the U.S. Dept. of Labor

▪ Based on regular survey of 60,000 households

▪ Based on “adult population” )16 yrs or older)

Labor Force Statistics مهم

BLS divides population into 3 groups: 3ينقسم السكان الى مجموعات

▪ Employed: paid employees, self-employed, and unpaid workers in a

family business

– عائليةوالعاملين لحسابهم الخاص ، والعمال غير المأجورين في شركة المدفوع لهم، الموظفون : الموظفون

▪ Unemployed: people not working who have looked for work during

previous 4 weeks

– أسابيع الماضيه 4الذين بحثوا عن عمل خالل ال, األشخاص الذين اليعملون: العاطلون

▪ Not in the labor force: everyone else

– آخرأي شخص : ليس في قوة العمل

The labor force is the total # of workers, including the employed andمهم

unemployed. القوى العاملة هي مجموع عدد العمال ، بما في ذلك العاملين والعاطلين عن العمل

labor force participation rate

labor force

adult population = 100 x

Labor Force Statistics

Labor force participation rate: % of the adult population that is in the labor

force

:معدل مشاركة قوة العمل النسبه المئويه من السكان البالغين في القوى العاملة

Unemployment rate )“u-rate”(: % of the labor force that is unemployed

النسبة المئوية من القوى العاملة العاطلة ( معدل البطالة u-rate")

u-rate # of unemployed

labor force = 100 x

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1 مهم جدا

Calculate labor force statistics

Compute the labor force, u-rate, adult population,

and labor force participation rate using this data:

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Adult population of the U.S.

by group, April 2011

# of employed 139.7 million

# of unemployed 13.7 million

not in labor force 85.7 million

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

Labor force = employed + unemployed

= 139.7 + 13.7

= 153.4 million

U-rate = 100 x (unemployed)/(labor force)

= 100 x 13.7/153.4

= 8.9%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

Population = labor force + not in labor force

= 153.4 + 85.7

= 239.1

LF partic. rate = 100 x (labor force)/(population)

= 100 x 153.4/239.1

= 64.2%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Labor Force Statistics for Different Groups

▪ The BLS publishes these statistics for

demographic groups within the population.

▪ These data reveal widely different labor market

experiences for different groups.

Labor Force Statistics for Whites & Blacks, April 2011

Adults (20 yrs & older)

u-rate LF part. rate

White, male 7.9% 73.9%

White, female 7.0 59.8

Black, male 17.0 68.6

Black, female 13.4 62.0

Labor Force Statistics for Whites & Blacks, April 2011

Adults (20 yrs & older)

u-rate LF part. rate

White, male 7.9% 73.9%

White, female 7.0 59.8

Black, male 17.0 68.6

Black, female 13.4 62.0

Labor Force Statistics for Whites & Blacks, April 2011

Teens (16–19 yrs)

u-rate LF part. rate

White 22.3% 36.2%

Black 41.6% 26.2%

Labor Force Statistics for Other Groups, April 2011

All ages

u-rate LF part. rate

Asian 6.4% 64.1%

Hispanic 11.8 66.6

Labor Force Statistics by Education Level, April 2011

Adults (25 yrs & older)

u-rate LF part. rate

less than h.s. 14.6% 45.5%

h.s. diploma 9.7 60.4

some college or assoc degree

7.5 69.7

bachelor’s degree or more

4.5 77.0

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Limitations of the u-rate

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In each of the following, what happens to the u-rate? Does the u-rate give an

accurate impression of what’s happening in the labor market?

العمل؟انطباًعا دقيقًا عما يحدث في سوق uفي كل مما يلي ، ماذا يحدث للمعدل؟ هل يعطي معدل

A. Sue lost her job and begins looking for a new one.

B. .فقدت سو وظيفتها وبدأت تبحث عن وظيفة جديدة

B. Jon, a steelworker who has been out of work since his mill closed last

year, becomes discouraged and gives up looking for work.

C. جون ، وهو عامل في مجال الصلب الذي كان عاطل عن العمل منذ أن تم إغالق مصنعه العام الماضي ، .البحث عن عملمحبط ويتخلى عن يصبح

C. Sam, the sole earner in his family of 5, just lost his $80,000 job as a

research scientist. Immediately, he takes a part-time job at McDonald’s until he can find another job in his field. سام ، وهو الشخص الوحيد في أسرته المكون من

على الفور ، يأخذ وظيفة بدوام جزئي في . دوالر كعاِلم أبحاث 80،000أفراد ، فقد وظيفته البالغة 5 .مجالهماكدونالد حتى يتمكن من العثور على وظيفة أخرى في

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Sue lost her job and begins looking for a new one. .سو وظيفتها وبدأت تبحث عن وظيفة جديدةفقدت

u-rate rises

A rising u-rate gives the impression that the labor market is worsening, and it is.

.يعطي االنطباع بأن سوق العمل يزداد سوءا ، وهو كذلك Uارتفاع معدل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

B. Jon has been out of work since last year, becomes discouraged,

stops looking for work. C. كان جون عاطل عن العمل منذ العام الماضي ، ويصبح محبًطا ، ويتوقف عن البحث عن عمل

Discouraged workers ▪ would like to work but have given up looking for jobs

▪ classified as “not in the labor force” rather than “unemployed” ▪ يود العمل ولكن تخلى عن البحث عن عمل ▪ "العاطلين عن العمل"بدالً من " ليست في قوة العمل"مصنفة على أنها

U-rate falls because Jon is no longer counted as unemployed.

.العمليعد يعتبر عاطال عن جون لم معدل البطاله ألن انخفاض

A falling u-rate gives the impression that the labor market is improving, but it is

not.

.االنطباع بأن سوق العمل يتحسن ، ولكنه ليس كذلكمعدل البطاله انخفاض ويعطي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

C. Sam lost his $80,000 job, and takes a part-time job at

McDonald’s until he finds a better one. D. دوالر ، ويأخذ وظيفة بدوام جزئي في مطعم ماكدونالدز إلى أن 80،000فقد سام وظيفته التي تبلغ

.يجد وظيفة أفضل

U-rate unchanged because a person is “employed” whether they work full or part time.

Things are worse, but the u-rate fails to show it.

األمور أسوأ ، . كامل أو جزئيكان يعمل بدوام سواء " موظف"معدل البطاله لم يتغير ألن الشخص .إلظهار ذلكولكن معدل البطاله فشل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What Does the U-Rate Reallyقراءه Measure?ماذا يقيس معدل البطاله

▪ The u-rate is not a perfect indicator of joblessness or the health of

the labor market: :مؤشرا مثاليا للبطالة أو صحة سوق العملالبطاله ليس معدل

▪ It excludes discouraged workers. المحبطينوهو يستثني العمال.

▪ It does not distinguish between full-time and

part-time work, or people working part time because full-time jobs not available.

▪ أو العمل لبعض الوقت أو األشخاص الذين يعملون بدوام / وال يميز بين العمل بدوام كامل و .جزئي ألن الوظائف بدوام كامل غير متوفرة

▪ Some people misreport their work status in the BLS survey.

▪ دراسة بعض الناس يسجلون حالة عملهم في BLS.

▪ Despite these issues, the u-rate is still a very useful barometer of the

labor market & economy. القضاياعلى الرغم من هذه

▪ .مفيًدا جًدا لسوق العمل واالقتصادمقياًسا معدل البطالهال يزال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Duration of Unemployment

Most spells of unemployment are short:

▪ Typically 1/3 of the unemployed

have been unemployed under 5 weeks, 2/3 have been unemployed under 14 weeks.

▪ Only 20% have been unemployed over 6 months.

Yet, most observed unemployment is long term.

▪ The small group of long-term unemployed persons

has fairly little turnover, so it accounts for most of

the unemployment observed over time.

Knowing these facts helps policymakers design

better policies to help the unemployed.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Cyclical Unemployment vs. the Natural Rateمهم جدا البطالة الدورية مقابل المعدل الطبيعي

There’s always some unemployment, though the u-rate fluctuates from year to year.

.يتقلب من سنة إلى أخرى البطاله هناك دائًما بعض البطالة ، رغم أن معدل أنواع البطاله

Natural rate of unemployment معدل طبيعي للبطالة

▪ the normal rate of unemployment around which the actual unemployment rate fluctuates

▪ حولهالمعدل الطبيعي للبطالة الذي يتقلب معدل البطالة الفعلي

Cyclical unemployment الدوريةالبطالة

▪ the deviation of unemployment from its natural rate. ▪ انحراف البطالة عن معدلها الطبيعي

▪ associated with business cycles, which we’ll study in later chapters ▪ مرتبطة بدورات العمل ،

Explaining the Natural Rate: An Overview

Even when the economy is doing well, there is always some unemployment, including: حتى عندما يكون األداء االقتصادي جيًدا ، فهناك دائًما بعض :البطالة ، بما في ذلك

Frictional unemployment االحتكاكيةالبطالة

▪ occurs when workers spend time searching for the jobs that best suit their skills and tastes.

– يحدث عندما يقضي العمال الوقت في البحث عن الوظائف التي تناسب مهاراتهم وأذواقهم – short-term for most workers – المدى القصير لمعظم العمالعلى

Structural unemployment الهيكليةالبطالة

▪ occurs when there are fewer jobs than workers

– العماليحدث عندما تكون هناك وظائف أقل من

– usually longer-term عادة على المدى الطويل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Job Searchقراءه

▪ Workers have different tastes & skills, and

jobs have different requirements.

▪ Job search is the process of matching workers

with appropriate jobs. هو عملية مطابقة العمال بالوظائف المناسبة

▪ Sectoral shifts are changes in the composition of

demand across industries or regions of the

country.

▪ Such shifts displace some workers,

who must search for new jobs appropriate

for their skills & tastes.

▪ The economy is always changing,

so some frictional unemployment is inevitable.

Public Policy and Job Searchقراءه

▪ Govt employment agencies

provide information about job vacancies to speed up the matching of workers with jobs.

• تقدم وكاالت التوظيف الحكومية معلومات عن الوظائف الشاغرة لتسريع عملية مطابقة العمال .بالوظائف

▪ Public training programs

aim to equip workers displaced from declining industries with the skills needed in growing industries.

• تهدف برامج التدريب العامة إلى تزويد العمال النازحين من الصناعات المتدهورة بالمهارات .الالزمة في الصناعات المتنامية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Unemployment Insurance

▪ Unemployment insurance (UI): a govt program that partially protects workers’ incomes when they become unemployed

▪ العملعندما يصبحون عاطلين عن دخل العمال برنامج حكومي يحمي جزئيا : البطالةضد التأمين

▪ UI increases frictional unemployment. االحتكاكيةمن البطالة يزيد التأمين ضد البطالة To see why, recall one of the Ten Principles of Economics:

People respond to incentives.

UI benefits end when a worker takes a job, so workers have less

incentive to search or take jobs while eligible to receive benefits. تنتهي استحقاقات التأمين ضد البطالة عندما يأخذ العامل وظيفة ، بحيث يكون لدى العمال حافز أقل للبحث

أو الحصول على وظائف بينما يكونون مؤهلين لتلقي االستحقاقات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Unemployment Insurance

Benefits of UI:

▪ Reduces uncertainty over incomes

▪ Gives the unemployed more time to search, resulting in better job matches and thus higher productivity

▪ :التأمين ضد البطالهفوائد

▪ الدخليقلل من عدم اليقين بشأن

▪ يمنح العاطلين مزيًدا من الوقت للبحث ، مما يؤدي إلى تحسينات في الوظائف وبالتالي زيادة اإلنتاجية

Explaining Structural Unemploymentمهم

Structural unemployment

occurs when not enough jobs to

go around. يحدث عندما ال يكون -البطالة الهيكلية

.هناك ما يكفي من الوظائف

L D

actual wage

unemp-

loyment

Occurs when wage

is kept above eq’m.

There are three reasons for

this

فوق نقطة يحدث عندما يتم االحتفاظ باألجور هناك ثالثة أسباب لذلك. التوازن

Minimum-Wage Laws .1قراءه

▪ The min. wage may exceed the eq’m wage for the least skilled or

experienced workers, causing structural unemployment.

• قد يتجاوز األجر أجر التوازن بالنسبة للعمال األقل مهارة أو خبرة ، مما يسبب . الحد االدنى .البطالة الهيكلية

▪

▪ But this group is a small part of the labor force, so the min. wage

can’t explain most unemployment. .لكن هذه المجموعة جزء صغير من قوة العمل ، لذا فإن الحد األدنى لألجور ال يمكن أن يفسر معظم البطالة

Unions .2قراءه

▪ Union: a worker association that bargains with employers over wages,

benefits, and working conditions

• العمل على األجور والمزايا وظروف العملتفاوض أرباب عاملة ( شركه)رابطة: االتحاد

▪ Unions exert their market power to negotiate higher wages for workers.

• .تقوم النقابات بممارسة قوتها في السوق للتفاوض على أجور أعلى للعمال

▪ The typical union worker earns 20% higher wages and gets more

benefits than a nonunion worker for the same type of work.

• ٪ ويحصل على فوائد أكثر من عامل غير نقابي 20العامل النقابي النموذجي يحصل على أجور أعلى بنسبة .لنفس النوع من العمل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. Unions

▪ When unions raise the wage above eq’m, quantity of labor

demanded falls and unemployment results. ▪ .عندما ترفع النقابات األجر فوق كمية التوازن للعمالة التي تطلبها وتؤدي إلى نتائج البطالة

▪

▪ “Insiders” – workers who remain employed, are better off

▪ العمال الذين يظلون يعملون ، أفضل حاالً -" المطلعون"

▪ “Outsiders” – workers who lose their jobs, are worse off

▪ حاالً العمال الذين يفقدون وظائفهم ، هم أسوأ -" الغرباء"

▪ Some outsiders go to non-unionized labor markets, which increases

labor supply and reduces wages in those markets.

▪ يذهب بعض الغرباء إلى أسواق العمل غير النقابية ، مما يزيد من المعروض من العمالة ويقلل األجور في .تلك األسواق

▪

2. Unions

Are unions good or bad? Economists disagree.

.هل النقابات جيدة أم سيئة؟ يختلف االقتصاديون

▪ Critics:

Unions are cartels. They raise wages above eq’m, which causes

unemployment and/or depresses wages in non-union labor markets.

• أو يخفض / إنهم يرفعون األجور فوق التوازن ، مما يسبب البطالة و (. او االحتكار)نقابات العصابات: النقاد .األجور في أسواق العمل غير النقابية

▪ Advocates: Unions counter the market power of large firms, make firms more

responsive to workers’ concerns. • تواجه النقابات قوة السوق في الشركات الكبيرة ، وتجعل الشركات أكثر استجابة الهتمامات : المدافعون

العمال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3. Efficiency Wages كفاءة االجور

▪ The theory of efficiency wages:

Firms voluntarily pay above-equilibrium wages to boost worker productivity.

▪ .تدفع الشركات طواعية األجور فوق مستوى التوازن لزيادة إنتاجية العمال: كفاءة االجورنظرية

▪ Different versions of efficiency wage theory suggest different

reasons why firms pay high wages.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3. Efficiency Wages

1. 1.Worker health صحة العامل

In less developed countries, poor nutrition is a common problem. Paying higher wages allows workers to eat better, makes them

healthier, more productive. 2. دفع أجور أعلى يسمح للعمال بأكل أفضل ، . في البلدان األقل نمواً ، يعد سوء التغذية مشكلة شائعة

.ويجعلهم أكثر صحة ، وأكثر إنتاجية

2. Worker turnover معدل دوران العامل

Hiring & training new workers is costly. Paying high wages gives workers more incentive to stay, reduces

turnover.

3. دفع األجور المرتفعة يمنح العمال حافًزا أكبر للبقاء ، ويقلل من . إن توظيف وتدريب عمال جدد أمر مكلف معدل الدوران

:Four reasons why firms might pay efficiency wagesمهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3. Efficiency Wages

3. Worker quality العاملجودة

Offering higher wages attracts better job applicants, increases quality of the firm’s workforce.

.ويزيد من جودة القوى العاملة في الشركةافضل المتقدمين للوظيفه، تقديم أجور أعلى يجذب

4. 4.Worker effort جهد العامل Workers can work hard or shirk. Shirkers are fired if caught. Is being

fired a good deterrent?

5. الهربيمكن للعمال العمل الجاد أو

Depends on how hard it is to find another job. If market wage is

above eq’m wage, there aren’t enough jobs to go around, so workers have more incentive to work not shirk.

إذا كان أجر السوق أعلى من أجر التوازن ، فليس هناك ما يكفي . يعتمد على مدى صعوبة العثور على وظيفة أخرى .الهربمن فرص العمل ، لذلك فإن العمال لديهم حافز أكبر للعمل وليس

Four reasons why firms might pay efficiency wages:

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Applying the concepts

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Which of the following would be most likely to reduce frictional

unemployment? أي مما يلي من المرجح أن يقلل من البطالة االحتكاكية؟ A. A. The govt eliminates the minimum wage. B. .األدنى لألجورتلغي الحد الحكومة

B. B.The govt increases unemployment insurance benefits.

C. .الحكومة تزيد من فوائد التأمين ضد البطالة

C. A new law bans labor unions. قانون جديد يمنع النقابات العمالية.

D. More workers post their resumes at Monster.com, and more

employers use Monster.com to find suitable workers to hire.

E. ويستخدم المزيد من أصحاب ، Monster.comيقوم المزيد من العمال بنشر سيرتهم الذاتية على موقع للعثور على عمال مناسبين لتوظيفهم Monster.comالعمل موقع

E. Sectoral shifts become more frequent. تكراراتصبح التحوالت القطاعية أكثر.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. The govt eliminates the minimum wage.

C. A new law bans labor unions.

These are likely to reduce

structural unemployment,

not frictional unemployment.

.من المرجح أن تقلل هذه البطالة الهيكلية ، وليس البطالة االحتكاكية

Which of the following would be most likely to reduce

frictional unemployment?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Which of the following would be most likely to reduce

frictional unemployment?

B. The govt increases unemployment insurance benefits.

E. Sectoral shifts become more frequent.

These are likely to increase

frictional unemployment, not reduce it.

.من المرجح أن يزيد هذا من البطالة االحتكاكية ، وليس الحد منها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Which of the following would be most likely to reduce

frictional unemployment?

D. More workers post their resumes at Monster.com, and more employers use Monster.com to find

suitable workers to hire.

Likely to speed up the process of matching workers &

jobs, which would

reduce frictional unemployment.

من المرجح تسريع عملية مطابقة العمال والوظائف ، مما يقلل من البطالة االحتكاكية

Explaining the Natural Rate of Unemployment: A Summary

The natural rate of unemployment consists of

▪ frictional unemployment

▪ It takes time to search for the right jobs

▪ Occurs even if there are enough jobs to go around

▪ structural unemployment

▪ When wage is above eq’m, not enough jobs ▪ Due to min. wages, labor unions, efficiency wages

In later chapters, we will learn about cyclical

unemployment, the short-term fluctuations in

unemployment associated with business cycles.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The unemployment rate is the percentage of those who would like to work who do not have jobs.

• .معدل البطالة هو النسبة المئوية ألولئك الذين يرغبون في العمل الذين ليس لديهم وظائف

• Unemployment and labor force participation vary widely across demographic groups.

• .تختلف البطالة ومشاركة القوى العاملة بشكل كبير عبر المجموعات الديموغرافية

• The natural rate of unemployment is the normal rate of unemployment around which the actual rate fluctuates. Cyclical unemployment is the deviation of unemployment from its natural rate and is connected to short-term economic fluctuations.

• البطالة الدورية هي . المعدل الطبيعي للبطالة هو المعدل الطبيعي للبطالة الذي يتقلب حوله المعدل الفعلي .انحراف البطالة عن معدلها الطبيعي وترتبط بالتقلبات االقتصادية قصيرة األجل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The natural rate includes frictional unemployment and structural

unemployment. • الهيكليةالمعدل الطبيعي يشمل البطالة االحتكاكية والبطالة

• Frictional unemployment occurs when workers take time to search

for the right jobs.

• .تحدث البطالة االحتكاكية عندما يأخذ العمال الوقت للبحث عن الوظائف المناسبة

• Structural unemployment occurs when above- equilibrium wages result in a surplus of labor.

• .تحدث البطالة الهيكلية عندما تؤدي األجور فوق التوازن إلى فائض من العمالة

• Three reasons for above-equilibrium wages include minimum wage

laws, unions, and efficiency wages.

• ثالثة أسباب ألجور أعلى من التوازن تتضمن قوانين الحد األدنى لألجور ، والنقابات ، وأجور الكفاءة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What assets are considered “money”? What are the functions of money? The types of money?

• What is the Federal Reserve?

• What role do banks play in the monetary

system? How do banks “create money”? • How does the Federal Reserve control the

money supply?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What Money Is and Why It’s Important

▪ Without money, trade would require barter,

the exchange of one good or service for another.

▪ Every transaction would require a double

coincidence of wants—the unlikely occurrence

that two people each have a good the other wants.

▪ Most people would have to spend time searching

for others to trade with—a huge waste of

resources.

▪ This searching is unnecessary with money,

the set of assets that people regularly use to buy

g&s from other people.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

وظائف المال The 3 Functions of Moneyمهم

▪ Medium of exchange: an item buyers give to sellers when they

want to purchase g&s ▪ أحد المشترين الذين يقدمونه للبائعين عندما يريدون شراء السلع والخدمات: وسيط للتبادل

▪ Unit of account: the yardstick people use to post prices and record

debts

▪ الديوناألسعار وتسجيل مقياس لنشر يستخدم األشخاص : وحدة الحساب

▪ Store of value: an item people can use to transfer purchasing power from the present to the future

▪ عنصر يمكن لألشخاص استخدامه لتحويل القدرة الشرائية من الحاضر إلى المستقبل: تخزين القيمة

The 2 Kinds of Moneyمهم

Commodity money:

takes the form of a commodity with intrinsic

value

Examples: gold coins, cigarettes in POW

camps

تأخذ شكل سلعة ذات قيمة جوهرية: أموال السلع

العمالت الذهبية والسجائر في معسكرات األسرى: أمثلة

Fiat money:

money without intrinsic value, used as money

because of

govt decree

Example: the U.S. dollar

‘ بسبب كمال المال دون قيمة جوهرية ، وتستخدم : النقود الورقيه مرسوم الحكومة

الدوالر األمريكي: مثال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

العرض النقدي The Money Supplyمهم

▪ The money supply (or money stock):

the quantity of money available in the economy ▪ االقتصادكمية المال المتاحة في

▪ What assets should be considered part of the money supply? Two

candidates: ما األصول التي يجب اعتبارها جزًءا من عرض النقود؟ اثنان من المرشحين:

▪ Currency: the paper bills and coins in the hands of the (non- bank) public

▪ Demand deposits: balances in bank accounts that depositors

can access on demand by writing a check

▪ (غير المصرفي)الفواتير الورقية والمعدنية في أيدي الجمهور : العملة

▪ أرصدة في الحسابات البنكية التي يمكن للمودعين الوصول إليها عند الطلب عن طريق : ودائع الطلب كتابة شيك

األمريكي إجراءات العرض النقدي Measures of the U.S. Money Supplyمهم

m1األشياء اللي تشمل

▪ M1: currency, demand deposits, traveler’s checks, and other checkable

deposits.

M1 = $1.9 trillion (February 2011)

.العملة والودائع تحت الطلب والشيكات السياحية وغيرها من الودائع التي يمكن التحقق منها

m2األشياء اللي تشمل

▪ M2: everything in M1 plus savings deposits, small time deposits, money

market mutual funds, and a few minor categories.

M2 = $8.9 trillion (February 2011)

باإلضافة إلى ودائع االدخار ، والودائع الصغيرة ، وصناديق االستثمار في أسواق المال ، « 1إم»في كل شيء وعدد قليل من الفئات الفرعية

The distinction between M1 and M2

will often not matter when we talk about

“the money supply” in this course.

M2و M1لن يكون التمييز بين

.في هذه الدورة" عرض النقود"عندما نتحدث عن غالبًا مهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Central Banks & Monetary Policyمهم

▪ Central bank: an institution that oversees the banking system and

regulates the money supply

▪ Monetary policy: the setting of the money supply by policymakers in the

central bank

▪ Federal Reserve (Fed): the central bank of the U.S.

▪ مؤسسة تشرف على النظام المصرفي وتنظم عرض النقود: البنك المركزي

▪ تحديد عرض النقود من قبل صناع السياسة في البنك المركزي: السياسة النقدية

▪ البنك المركزي للواليات المتحدة(: االحتياطي الفيدرالي)االحتياطي الفيدرالي

The Structure of the Fed

The Federal Reserve System consists of:

▪ Board of Governors

(7 members), located in Washington, DC

▪ 12 regional Fed banks, located around the U.S.

▪ Federal Open Market Committee (FOMC),

includes the Bd of Govs and

presidents of some of the regional Fed banks The FOMC decides monetary policy.

Ben S. Bernanke Chair of FOMC,

Feb 2006 – present

Bank Reserves احتياطيات البنك

▪ In a fractional reserve banking system, banks keep a fraction of

deposits as reserves and use the rest to make loans. • في النظام المصرفي االحتياطي الجزئي ، تحتفظ البنوك بجزء من الودائع كاحتياطيات وتستخدم الباقي

للحصول على قروض

▪ The Fed establishes reserve requirements, regulations on the

minimum amount of reserves that banks must hold against deposits.

• يحدد االحتياطي الفيدرالي متطلبات االحتياطي ، اللوائح المتعلقة بالحد األدنى من االحتياطيات التي يجب .على البنوك االحتفاظ بها مقابل الودائع

▪ Banks may hold more than this minimum amount if they choose.

• .يجوز للبنوك االحتفاظ بأكثر من هذا الحد األدنى إذا اختاروا

▪ The reserve ratio, Rمهم

= fraction of deposits that banks hold as reserves=total reserves as a

percentage of total deposits نسبة االحتياطي

جزء من الودائع التي تحتفظ بها البنوك كاحتياطيات=

إجمالي االحتياطيات كنسبة من إجمالي الودائع=

Bank T-Account • T-account: a simplified accounting statement that shows a bank’s assets &

liabilities. بيان محاسبة مبسط يعرض األصول والمطلوبات الخاصة بالبنك

▪ Example: »الزم تعرف ان األصول تشمل االحتياطات والقروض وااللتزامات تشمل االيداعات«فلوس الناس

FIRST NATIONAL BANK

Assets Liabilities

Reserves $ 10

Loans $ 90

Deposits $100

▪ Banks’ liabilities include deposits, assets include loans & reserves.

▪ In this example, notice that R = $10/$100 = 10%.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example مهم

Suppose $100 of currency is in circulation.

To determine banks’ impact on money supply,

we calculate the money supply in 3 different cases:

1. No banking system

2. 100% reserve banking system:

banks hold 100% of deposits as reserves,

make no loans

3. Fractional reserve banking system

3. .دوالر من العملة في التداول 100افترض أن

4. :حاالت مختلفة 3لتحديد تأثير البنوك على عرض النقود ، نحسب عرض النقود في

5. ال يوجد نظام مصرفي. 1

6. ٪ من الودائع كاحتياط ، وال تقدم قروضا100تحتفظ البنوك بنسبة : ٪100نظام مصرفي احتياطي بنسبة . 2

7. النظام المصرفي االحتياطي الجزئي. 3

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

CASE 1: No banking system

Public holds the $100 as currency.

Money supply = $100.

ال يوجد نظام مصرفي: 1الحالة

.دوالر كعملة 100يحمل العامة

.دوالر 100= عرض النقود

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

CASE 2: 100% reserve banking system 100احتياطي بنسبة نظام مصرفي : الحاله الثانيه٪

Public deposits the $100 at First National Bank (FNB). دوالر في البنك الوطني األول 100الودائع العامة (FNB).

FIRST NATIONAL BANK

Assets Liabilities

Reserves $100

Loans $ 0

Deposits $100

FNB holds

100% of

deposit

as reserves:

Money supply = currency + deposits = $0 + $100 = $100

In a 100% reserve banking system, banks do not affect size of money supply. ٪ ، ال تؤثر البنوك على حجم المعروض من النقود100في نظام مصرفي احتياطي بنسبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

CASE 3: Fractional reserve banking system النظام المصرفي االحتياطي الجزئي: 3الحالة

Depositors have $100 in deposits, borrowers have $90 in currency.

Money supply = C + D = $90 + $100 = $190 (!!!) .دوالر في العملة 90لديها المقترضين ,من الودائع $ 100لدى المودعين

= عرض النقود C + D = $ 90 + 100 $ = 190 $

FIRST NATIONAL BANK

Assets Liabilities

Reserves $100

Loans $ 0

Deposits $100

Suppose R = 10%. FNB loans all but 10%

of the deposit:

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

How did the money supply suddenly grow?

When banks make loans, they create money.

The borrower gets

▪ $90 in currency—an asset counted in the

money supply

▪ $90 in new debt—a liability that does not have

an offsetting effect on the money supply

CASE 3: Fractional reserve banking system

مهم A fractional reserve banking system creates money, but not wealth.

.النظام المصرفي االحتياطي الجزئي يخلق المال ، ولكن ليس الثروة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

CASE 3: Fractional reserve banking system

If R = 10% for SNB, it will loan all but 10% of the

deposit.

SECOND NATIONAL BANK

Assets Liabilities

Reserves $ 90

Loans $ 0

Deposits $ 90

Borrower deposits the $90 at Second National Bank.

Initially, SNB’s T-account

looks like this: 9

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: An Example

CASE 3: Fractional reserve banking system

If R = 10% for TNB, it will loan all but 10% of the

deposit.

THIRD NATIONAL BANK

Assets Liabilities

Reserves $ 81

Loans $ 0

Deposits $ 81

SNB’s borrower deposits the $81 at Third National

Bank.

Initially, TNB’s T-account

looks like this: $ 8.10

$72.90

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Banks and the Money Supply: Anمو مهم Example

CASE 3: Fractional reserve banking system

The process continues, and money is created with

each new loan.

Original deposit =

FNB lending =

SNB lending =

TNB lending = . .

100

.00

90.

81.

In this

example,

$100 of

reserves

generates

$1000 of

money.

المضاعف المالي The Money Multiplierمهم

▪ Money multiplier: the amount of money the banking system generates

with each dollar of reserves

• مقدار األموال التي يولدها النظام المصرفي مع كل دوالر من االحتياطيات: مضاعف النقود

▪ The money multiplier equals 1/R.

▪ In our example,

R = 10%

money multiplier = 1/R = 10

$100 of reserves creates $1000 of money

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Banks and the money supplyمهم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

While cleaning your apartment, you look under the

sofa cushion and find a $50 bill (and a half-eaten

taco). You deposit the bill in your checking account.

The Fed’s reserve requirement is 20% of deposits.

A. What is the maximum amount that the money supply could increase?

B. What is the minimum amount that the money supply could increase?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

If banks hold no excess reserves, then

money multiplier = 1/R = 1/0.2 = 5

The maximum possible increase in deposits is

5 x $50 = $250

But money supply also includes currency,

which falls by $50.

Hence, max increase in money supply = $200.

You deposit $50 in your checking account.

A. What is the maximum amount that the money supply could increase?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Answer: $0

If your bank makes no loans from your deposit,

currency falls by $50, deposits increase by $50,

money supply does not change.

You deposit $50 in your checking account.

A. What is the maximum amount that the money supply could increase?

Answer: $200

B. What is the minimum amount that the money supply could increase?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A More Realistic Balance Sheet

▪ Assets: Besides reserves and loans, banks also hold securities. ▪ باإلضافة إلى االحتياطيات والقروض ، فإن البنوك تحتفظ أيضاً باألوراق المالية: األصول

▪

▪ Liabilities: Besides deposits, banks also obtain funds from issuing debt and

equity.

▪ .باإلضافة إلى الودائع ، تحصل البنوك أيًضا على أموال من إصدار الديون وحقوق الملكية: االلتزامات

▪ Bank capital: the resources a bank obtains by issuing equity to its owners

▪ Also: bank assets minus bank liabilities

▪ Leverage: the use of borrowed funds to supplement existing funds for

investment purposes

▪ الموارد التي يحصل عليها البنك عن طريق إصدار حقوق الملكية ألصحابها: رأس مال البنك

▪ أصول البنك ناقص الخصوم المصرفية: أيضا

▪ استخدام األموال المقترضة الستكمال األموال الموجودة ألغراض االستثمار: الرافعه الماليه

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A More Realistic Balance Sheet

MORE REALISTIC NATIONAL BANK

Assets Liabilities

Reserves $ 200

Loans $ 700

Securities $ 100

Deposits $ 800

Debt $ 150

Capital $ 50

نسبة األصول إلى : الرافعه الماليهنسبة Leverage ratio: the ratio of assets to bank capitalمهم رأس مال المصرف

In this example, the leverage ratio = $1000/$50 = 20

Interpretation: for every $20 in assets,

$ 1 is from the bank’s owners, $19 is financed with borrowed money.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Leverage Amplifies Profits and Losses األرباح تضخم الرافعة المالية والخسائر

▪ In our example, suppose bank assets appreciate

by 5%, from $1000 to $1050. This increases bank

capital from $50 to $100, doubling owners’ equity. ▪ Instead, if bank assets decrease by 5%,

bank capital falls from $50 to $0.

▪ If bank assets decrease more than 5%, bank

capital is negative and bank is insolvent.

▪ Capital requirement: a govt regulation that specifies a minimum amount of capital, intended to ensure banks will be able to pay off

depositors and debts.

▪ نظام حكومي يحدد الحد األدنى لرأس المال ، ويهدف إلى ضمان قدرة البنوك على : متطلبات رأس المال .سداد المودعين والديون

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Leverage and the Financial Crisis

▪ In the financial crisis of 2008–2009, banks suffered

losses on mortgage loans and mortgage-backed

securities due to widespread defaults.

▪ Many banks became insolvent:

In the U.S., 27 banks failed during 2000–2007,

166 during 2008–2009.

▪ Many other banks found themselves with too little

capital, responded by reducing lending, causing a

credit crunch.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Government’s Response

▪ To ease the credit crunch, the Federal Reserve

and U.S. Treasury injected hundreds of billions of

dollars’ worth of capital into the banking system. ▪ This unusual policy temporarily made U.S.

taxpayers part-owners of many banks.

▪ The policy succeeded in recapitalizing the banking

system and helped restore lending to normal

levels in 2009.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Fed’s Tools of Monetary Control ▪ Earlier, we learned

money supply = money multiplier × bank reserves مهم

▪ The Fed can change the money supply by

changing bank reserves or

changing the money multiplier.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How the Fed Influences Reserves

▪ Open-Market Operations (OMOs):

the purchase and sale of U.S. government

bonds by the Fed.

▪ If the Fed buys a government bond from a

bank, it pays by depositing new reserves in that

bank’s reserve account. With more reserves, the bank can make more

loans, increasing the money supply.

▪ To decrease bank reserves and the money

supply, the Fed sells government bonds.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How the Fed Influences Reserves

▪ The Fed makes loans to banks, increasing their

reserves.

▪ Traditional method: adjusting the discount

rate—the interest rate on loans the Fed

makes to banks—to influence the amount of

reserves banks borrow

▪ New method: Term Auction Facility—the Fed chooses the quantity of reserves it will loan, then

banks bid against each other for these loans.

▪ The more banks borrow, the more reserves they

have for funding new loans and increasing the

money supply.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How the Fed Influences the Reserve Ratio

▪ Recall: reserve ratio = reserves/deposits,

which inversely affects the money multiplier.

▪ The Fed sets reserve requirements: regulations

on the minimum amount of reserves banks must

hold against deposits.

Reducing reserve requirements would lower the

reserve ratio and increase the money multiplier.

▪ Since 10/2008, the Fed has paid interest on

reserves banks keep in accounts at the Fed.

Raising this interest rate would increase the

reserve ratio and lower the money multiplier.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Problems Controlling the Money Supply

▪ If households hold more of their money as currency, banks have fewer reserves, make fewer loans, and money supply falls.

▪ If banks hold more reserves than required, they make fewer loans, and money supply falls.

▪ Yet, Fed can compensate for household and bank behavior to retain fairly precise control over the money supply.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Bank Runs and the Money Supply

▪ A run on banks:

When people suspect their banks are in trouble,

they may “run” to the bank to withdraw their funds, holding more currency and less deposits.

▪ Under fractional-reserve banking, banks don’t have enough reserves to pay off ALL depositors,

hence banks may have to close.

▪ Also, banks may make fewer loans and hold more

reserves to satisfy depositors.

▪ These events increase R, reverse the process of

money creation, cause money supply to fall.

Bank Runs and the Money Supply

▪ During 1929–1933, a wave of bank runs and

bank closings caused money supply to fall 28%.

▪ Many economists believe this contributed to the

severity of the Great Depression.

▪ Since then, federal deposit insurance has

helped prevent bank runs in the U.S.

▪ In the U.K., though, Northern Rock bank

experienced a classic bank run in 2007 and was

eventually taken over by the British government.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Federal Funds Rate

▪ On any given day, banks with insufficient reserves

can borrow from banks with excess reserves.

▪ The interest rate on these loans is the federal

funds rate.

▪ The FOMC uses OMOs to target the fed funds

rate.

▪ Changes in the fed funds rate cause changes in

other rates and have a big impact on the

economy.

Monetary Policy and the Fed Fundsمو مهمه الرسمه Rate

To raise fed funds rate, Fed sells

govt bonds (OMO).

This removes reserves from the

banking system,

reduces supply of

federal funds,

causes rf to rise.

3.75%

3.50%

The Federal Funds market Federal

funds rate

Quantity of federal funds

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Money serves three functions: medium of exchange, unit of

account, and store of value. • .وحدة الحساب ، وتخزين القيمةوسيط للتبادل، : المال يخدم ثالث وظائف

• There are two types of money: commodity money has intrinsic

value; fiat money does not.

• النقود الورقيه ليس لديها. أموال السلع لديها قيمة جوهرية: هناك نوعان من المال

• The U.S. uses fiat money, which includes currency and various

types of bank deposits.

• تستخدم الواليات المتحدة األموال الورقية ، والتي تتضمن العملة وأنواع مختلفة من الودائع .المصرفية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• In a fractional reserve banking system, banks create money when

they make loans. Bank reserves have a multiplier effect on the money supply.

• احتياطيات . في النظام المصرفي االحتياطي الجزئي ، تخلق البنوك األموال عندما تقدم قروضا .البنك لها تأثير مضاعف على المعروض من النقود

• Because banks are highly leveraged, a small change in the value of

a bank’s assets causes a large change in bank capital. To protect depositors from bank insolvency, regulators impose minimum capital

requirements.

• ونظًرا ألن البنوك تتمتع برافعة مالية كبيرة ، فإن التغير الطفيف في قيمة أصول أحد البنوك يؤدي إلى لحماية المودعين من إفالس البنوك ، تفرض الهيئات التنظيمية الحد . حدوث تغيير كبير في رأس مال البنك

األدنى من متطلبات رأس المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The Federal Reserve is the central bank of the U.S., is responsible

for regulating the monetary system. • النقدياالحتياطي الفيدرالي هو البنك المركزي للواليات المتحدة ، وهو مسؤول عن تنظيم النظام

• The Fed controls the money supply mainly through open-market

operations. Purchasing govt bonds increases the money supply, selling govt bonds decreases it.

• يسيطر المصرف اإلحتياطي الفدرالي على المعروض النقدي بشكل رئيسي من خالل عمليات شراء السندات الحكومية يزيد من المعروض من المال ، وبيع السندات الحكومية . السوق المفتوحة

يخفضه

• In recent years, the Fed has set monetary policy by choosing a

target for the federal funds rate.

• في السنوات األخيرة ، وضع االحتياطي الفيدرالي السياسة النقدية عن طريق اختيار هدف لمعدل األموال االتحادية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How does the money supply affect inflation and

nominal interest rates?

• Does the money supply affect real variables like

real GDP or the real interest rate?

• How is inflation like a tax?

• What are the costs of inflation? How serious are

they?

Introduction

▪ This chapter introduces the quantity theory of

money to explain one of the Ten Principles of

Economics from Chapter 1:

Prices rise when the govt prints too much

money.

.ترتفع األسعار عندما تطبع الحكومة الكثير من المال

▪ Most economists believe the quantity theory

is a good explanation of the long run behavior

of inflation.

The Value of Money ▪ P = the price level

(e.g., the CPI or GDP deflator)

P is the price of a basket of goods, measured in

money.

▪ 1/P is the value of $1, measured in goods.

▪ Example: basket contains one candy bar.

▪ If P = $2, value of $1 is 1/2 candy bar

▪ If P = $3, value of $1 is 1/3 candy bar

▪ Inflation drives up prices and drives down the

value of money.

The Quantity Theory of Money

▪ Developed by 18th century philosopher

David Hume and the classical economists

▪ Advocated more recently by Nobel Prize Laureate

Milton Friedman

▪ Asserts that the quantity of money determines the

value of money

▪ We study this theory using two approaches:

1. A supply-demand diagram

2. An equation

Money Supply (MS)

▪ In real world, determined by Federal Reserve, the banking system,

consumers.

• .االحتياطي الفيدرالي ، والنظام المصرفي ، والمستهلكينمحدده من قبل البنك في العالم الحقيقي ،

▪ In this model, we assume the Fed precisely

controls MS and sets it at some fixed amount.

Money Demand (MD) الطلب على النقود

▪ Refers to how much wealth people want to hold in liquid form. • بشكل سلسيشير إلى مقدار الثروة التي يريد الناس االحتفاظ بها

▪ Depends on P:

An increase in P reduces the value of money, so more money is required to buy g&s.

• لذلك مطلوب المزيد من المال لشراء السلع , المالالزياده في السعر تقلل من قيمة , يعتمد على السعر والخدمات

• Thus, quantity of money demanded is negatively related to the value of money and positively related to P, other things equal.

(These “other things” include real income, interest rates, availability of ATMs.)

واألشياء األخرى , بالسعر إيجابيوبالتالي ، ترتبط كمية المال المطلوبة بشكل سلبي بقيمة المال وترتبط بشكل (تبقى مثل ماهي)متساوية

.(الدخل الحقيقي ، وأسعار الفائدة ، وتوافر أجهزة الصراف اآللي" األشياء األخرى"وتشمل هذه )

The Money Supply-Demand Diagram

Value of Money, 1/P

Price Level, P

Quantity of Money

1 1

¾ 1.33

½ 2

¼ 4

As the value of money rises, the price level falls.

The Money Supply-Demand Diagram

Value of Money, 1/P

Price Level, P

Quantity of Money

1.33

MS1

$1000

The Fed sets MS at some fixed value, regardless of P.

The Money Supply-Demand Diagram

Value of Money, 1/P

Price Level, P

Quantity of Money

1.33

4 MD1

A fall in value of money (or increase in P) increases the quantity of money demanded:

MS1

$1000

Value of Money, 1/P

Price Level, P

Quantity of Money

1.33

The Money Supply-Demand Diagram

MD1

P adjusts to equate quantity of money demanded with money supply.

eq’m price level

eq’m value

of money

MS1

$1000

The Effects of a Monetary Injection

Value of Money, 1/P

Price Level, P

Quantity of Money

1.33

4 MD1

eq’m price level

eq’m value

of money

MS2

$2000

Then the value of money falls, and P rises.

Suppose the Fed increases the money supply.

A Brief Look at the Adjustment Process

How does this work? Short version:

▪ At the initial P, an increase in MS causes

excess supply of money.

▪ People get rid of their excess money by spending

it on g&s or by loaning it to others, who spend it.

Result: increased demand for goods.

▪ But supply of goods does not increase,

so prices must rise.

(Other things happen in the short run, which we will

study in later chapters.)

Result from graph: Increasing MS causes P to rise.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Real vs. Nominal Variablesمهم

▪ Nominal variables are measured in monetary units.

Examples: nominal GDP,

nominal interest rate (rate of return measured in $)

nominal wage ($ per hour worked)

.نقديةبوحدات تقاس المتغيرات االسمية األجر االسمي ( معدل العائد المقاس بالدوالر)الناتج المحلي اإلجمالي االسمي ، معدل الفائدة االسمي : أمثلة

(دوالر للساعة الواحدة)

▪ Real variables are measured in physical units.

Examples: real GDP,

real interest rate (measured in output)

real wage (measured in output)

.الماديةتقاس بالوحدات المتغيرات الحقيقية

يتم قياسه )األجر الحقيقي ( يتم قياسه في الناتج)الناتج المحلي اإلجمالي الحقيقي ، سعر الفائدة الحقيقي : أمثلة (في الناتج

Real vs. Nominal Variablesمهم Prices are normally measured in terms of money.

▪ Price of a compact disc: $15/cd

▪ Price of a pepperoni pizza: $10/pizza

– .يتم قياس األسعار عادة من حيث المال

– قرص مضغوط/ دوالًرا 15: سعر القرص المضغوط

– بيتزا/ دوالرات 10: سعر بيتزا ببروني

A relative price is the price of one good relative to (divided by) another:

▪ Relative price of CDs in terms of pizza:

– ذات الصله باالخرى( مقسوًما)السلعه الواحده السعر النسبي هو سعر

– :السعر النسبي لألقراص المدمجة فيما يتعلق بالبيتزا

price of cd

price of pizza $15/cd

$10/pizza =

Relative prices are measured in physical units,

so they are real variables. يتم قياس األسعار النسبية في وحدات مادية ، لذلك فهي .متغيرات حقيقية

= 1.5 pizzas per cd

Real vs. Nominal Wageمهم An important relative price is the real wage:

W = nominal wage = price of labor, e.g., $15/hour

P = price level = price of g&s, e.g., $5/unit of output

Real wage is the price of labor relative to the price

of output:

:السعر النسبي الهام هو األجر الحقيقي

W = دوالراً في الساعة 15سعر العمالة ، على سبيل المثال ، = األجر االسمي

P = سعر = سعر المستوى g & s ، ، وحدة اإلنتاج/ 5$ على سبيل المثال

:األجر الحقيقي هو سعر العمالة بالنسبة لسعر اإلنتاج

P = 3 units output per hour

$15/hour

$5/unit of output =

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Classical Dichotomy الثنائيه الكالسيكيه

▪ Classical dichotomy: the theoretical separation of nominal and real

variables الفصل النظري للمتغيرات االسمية والحقيقية

▪ Hume and the classical economists suggested that monetary developments

affect nominal variables but not real variables.

▪ اقترح هيوم والخبراء االقتصاديون الكالسيكيون أن التطورات النقدية تؤثر على المتغيرات االسمية وليس المتغيرات الحقيقية

▪ If central bank doubles the money supply, Hume & classical thinkers contend

▪ all nominal variables—including prices—

will double.

▪ all real variables—including relative prices—

will remain unchanged.

The Neutrality of Money الحياد النقدي

▪ Monetary neutrality: the proposition that changes in the money supply do

not affect real variables

• االفتراض بأن التغييرات في المعروض النقدي ال تؤثر على المتغيرات الحقيقية

▪ Doubling money supply causes all nominal prices to double; what happens

to relative prices?

• مضاعفة المعروض من النقود يؤدي إلى تضاعف جميع األسعار االسمية ؛ ماذا يحدث لألسعار النسبية؟

Initially, relative price of cd in terms of pizza is في البداية ، السعر النسبي للقرص المضغوط من حيث البيتزا

price of cd

price of pizza = 1.5 pizzas per cd

$15/cd

$10/pizza =

▪ After nominal prices double,

price of cd

price of pizza = 1.5 pizzas per cd

$30/cd

$20/pizza =

The relative price is unchanged.

The Neutrality of Money

▪ Similarly, the real wage W/P remains unchanged, so

• لذلكيبقى دون تغيير ، W / Pوبالمثل ، فإن األجر الحقيقي

▪ quantity of labor supplied does not change

▪ quantity of labor demanded does not change

▪ total employment of labor does not change

– العمالة المعروضه ال تتغيركمية

– تتغيركمية العمل المطلوبة ال

– تتغيرإجمالي العمالة من العمل ال

▪ The same applies to employment of capital and

other resources.

▪ Since employment of all resources is unchanged,

total output is also unchanged by the money supply.

▪ Monetary neutrality: the proposition that changes in the money supply do

not affect real variables

▪ االقتراح بأن التغييرات في المعروض من النقود ال تؤثر على المتغيرات الحقيقية

The Neutrality of Money

▪ Most economists believe the classical dichotomy

and neutrality of money describe the economy in

the long run.

▪ In later chapters, we will see that monetary

changes can have important short-run effects

on real variables.

سرعة المال The Velocity of Moneyمهم جدا

▪ Velocity of money: the rate at which money changes hands

• المالالمعدل الذي يتغير فيه هو

▪ Notation:

P x Y = nominal GDP

= (price level) x (real GDP)

M = money supply

V = velocity

▪ Velocity formula: V = P x Y

The Velocity of Money

Example with one good: pizza.

In 2012,

Y = real GDP = 3000 pizzas

P = price level = price of pizza = $10

P x Y = nominal GDP = value of pizzas = $30,000

M = money supply = $10,000

V = velocity = $30,000/$10,000 = 3

The average dollar was used in 3 transactions.

.معامالت 3تم استخدام متوسط الدوالر في

Velocity formula: V = P x Y

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Exerciseمهم

One good: corn.

The economy has enough labor, capital, and land to produce Y = 800

bushels of corn.

Y = 800 الذرةمكيال من. إلنتاجلديه ما يكفي من العمالة ، ورأس المال ، واألرض االقتصاد

V is constant. ثابته

In 2008, MS = $2000, P = $5/bushel.

Compute nominal GDP and velocity in 2008.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Given: Y = 800, V is constant, MS = $2000 and P = $5 in 2005.

Compute nominal GDP and velocity in 2008.

Nominal GDP = P x Y = $5 x 800 = $4000

V = P x Y

M =

$400 0 $200

= 2

معادلة الكميه The Quantity Equationمهم

▪ Multiply both sides of formula by M: • «إم»بـ كال الجانبين من الصيغةضرب

M x V = P x Y

▪ Called the quantity equation

Velocity formula: V = P x Y

The Quantity Theory in 5 Steps خطوات 5نظرية الكمية في

1. V is stable. مستقر

2. So, a change in M causes nominal GDP (P x Y) to change by the same percentage. لذلك ، يؤدي التغيير فيM إلى تغيير الناتج المحلي اإلجمالي االسمي( P x Y) بنفس .النسبة المئوية

3.A change in M does not affect Y: money is neutral,Y is determined by

technology & resources

3. بواسطة التكنولوجيا والموارد« واي«يتم تحديد, المال محايد, «واي«اليؤثر على«إم«التغيير في

4.So, P changes by same percentage as P x Y and M.

4. إم& واي *بالنسبه المئويه نفسها لـ ب« ب«اذاً تتغير

5.Rapid money supply growth causes rapid inflation.

5. .نمو العرض النقدي السريع يسبب التضخم السريع

Start with quantity equation: M x V = P x Y

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Exercise

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

One good: corn. The economy has enough labor,

capital, and land to produce Y = 800 bushels of corn.

V is constant. In 2008, MS = $2000, P = $5/bushel.

For 2009, the Fed increases MS by 5%, to $2100.

a. Compute the 2009 values of nominal GDP and P. Compute the inflation rate for 2008–2009.

b. Suppose tech. progress causes Y to increase to

824 in 2009. Compute 2008–2009 inflation rate.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Given: Y = 800, V is constant, MS = $2000 and P = $5 in 2008.

For 2009, the Fed increases MS by 5%, to $2100.

a. Compute the 2009 values of nominal GDP and P.

Compute the inflation rate for 2008–2009.

Nominal GDP = P x Y = M x V )Quantity Eq’n(

P = P x Y

= $4200

80 0

= $5.25

= $2100 x 2 = $4200

Inflation rate = $5.25 – 5.00

5.00 = 5% (same as MS!)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Given: Y = 800, V is constant, MS = $2000 and P = $5 in 2005.

For 2009, the Fed increases MS by 5%, to $2100.

b. Suppose tech. progress causes Y to increase 3%

in 2009, to 824. Compute 2008–2009 inflation rate.

First, use Quantity Eq’n to compute P in 2009:

P = M x V

Y =

$4200

82 4

= $5.10

Inflation rate = $5.10 – 5.00

5.00 = 2%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Summary and Lessons about the Quantity Theory of Money

▪ If real GDP is constant, then

inflation rate = money growth rate.

▪ If real GDP is growing, then

inflation rate < money growth rate.

▪ The bottom line:

▪ Economic growth increases # of transactions.

▪ Some money growth is needed for these extra

transactions.

▪ Excessive money growth causes inflation.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Hyperinflation التضخم مهم التعريف

▪ Hyperinflation is generally defined as inflation exceeding 50% per

month.

• ٪ في الشهر50يتم تعريفه بشكل عام على أنه تضخم يتجاوز

▪ Recall one of the Ten Principles from Chapter 1:

Prices rise when the government

prints too much money.

▪ Excessive growth in the money supply always causes

hyperinflation.

• دائًما ما يؤدي النمو المفرط في المعروض النقدي إلى التضخم المفرط

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Sign posted in public restroom

Hyperinflation in Zimbabwe

Large govt budget deficits led to the creation of large quantities of money and high inflation

rates. أدت عجز الميزانية الحكومية الكبيرة إلى خلق كميات كبيرة من

.األموال ومعدالت تضخم عالية

date Zim$ per US$

Aug 2007 245

Apr 2008 29,401

May 2008 207,209,688

June 2008 4,470,828,401

July 2008 26,421,447,043

Feb 2009 37,410,030

Sept 2009 355

The Inflation Tax

▪ When tax revenue is inadequate and ability to

borrow is limited, govt may print money to pay

for its spending.

▪ Almost all hyperinflations start this way.

▪ The revenue from printing money is the inflation tax: printing money causes inflation, which is like a tax on

everyone who holds money.

• .طباعة النقود تسبب التضخم ، الذي يشبه فرض ضريبة على كل من يملك المال: ضريبة التضخم

▪ In the U.S., the inflation tax today accounts for

less than 3% of total revenue.

تأثير فيشر The Fisher Effectمهم ▪ Rearrange the definition of the real interest rate:

• :إعادة ترتيب تعريف سعر الفائدة الحقيقي

▪ The real interest rate is determined by saving & investment in the

loanable funds market. ▪ .يتم تحديد سعر الفائدة الحقيقي من خالل االدخار واالستثمار في سوق األموال القابلة لإلقراض

▪ Money supply growth determines inflation rate.

▪ التضخميحدد نمو عرض النقود معدل

▪ So, this equation shows how the nominal interest rate is determined.

▪ لذا ، توضح هذه المعادلة كيف يتم تحديد سعر الفائدة االسمي

▪

Real interest rate

Nominal interest rate

Inflation rate

+ =

The Fisher Effect

▪ In the long run, money is neutral,

so a change in the money growth rate affects

the inflation rate but not the real interest rate.

▪ So, the nominal interest rate adjusts one-for-one with changes in the

inflation rate.

▪ This relationship is called the Fisher effect

after Irving Fisher, who studied it.

▪ على المدى الطويل ، يكون المال محايًدا ، لذا فإن التغيير في معدل نمو المال يؤثر على معدل التضخم وليس .معدل الفائدة الحقيقي

▪ .لذا ، فإن سعر الفائدة االسمي يضبط واحد مقابل واحد مع التغيرات في معدل التضخم

▪ .وتسمى هذه العالقة تأثير فيشر بعد إيرفينغ فيشر ، الذي درسها

Real interest rate

Nominal interest rate

Inflation rate

+ =

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Fisher Effect & the Inflation Tax

▪ The inflation tax applies to people’s holdings of money, not their holdings of wealth.

▪ The Fisher effect: an increase in inflation causes an equal increase in the

nominal interest rate,

so the real interest rate (on wealth) is unchanged.

▪ .تنطبق ضريبة التضخم على حيازات الناس من المال ، وليس على ممتلكاتهم من الثروة

▪ الزيادة في التضخم تسبب زيادة متساوية في معدل الفائدة االسمية ، وبالتالي فإن معدل : تأثير فيشر لم يتغير( على الثروة)الفائدة الحقيقي

Real interest rate

Nominal interest rate

Inflation rate

+ =

The Costs of Inflation

▪ The inflation fallacy: most people think inflation erodes real

incomes. • الدخل الحقيقييعتقد معظم الناس أن التضخم يؤدي إلى تآكل : مغالطة التضخم

▪ But inflation is a general increase in prices

of the things people buy and the things they sell (e.g., their labor).

• (.مثل عملهم)لكن التضخم هو زيادة عامة في أسعار األشياء التي يشتريها الناس واألشياء التي يبيعونها

•

▪ In the long run, real incomes are determined by real variables, not

the inflation rate. • خالل المتغيرات الحقيقية ، وليس معدل التضخميتحدد الدخل الحقيقي من على المدى الطويل ،

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Costs of Inflation

▪ Shoeleather costs: the resources wasted when inflation encourages

people to reduce their money holdings

▪ Includes the time and transactions costs of more frequent bank

withdrawals

▪ الماليةهي الموارد التي تهدر عندما يشجع التضخم الناس على تقليل حيازاتهم : تكاليف األحذية الجلدية

▪ المتكررةيشمل تكاليف الوقت والمعاملة لعمليات السحب المصرفية

▪ Menu costs: the costs of changing prices

▪ Printing new menus, mailing new catalogs, etc.

▪ تكاليف تغيير األسعار: تكاليف القائمة

▪ .طباعة قوائم جديدة ، وإرسال كتالوجات جديدة عبر البريد ، وما إلى ذلك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Costs of Inflation

▪ Misallocation of resources from relative-price variability: Firms

don’t all raise prices at the same time, so relative prices can vary…

which distorts the allocation of resources.

ا ال ترفع الشركات جميع األسعار في نفس الوقت ، : سوء تخصيص الموارد من تقلب األسعار النسبية يشوه تخصيص المواردالذي ...قد تختلف األسعار النسبية لذا

▪ Confusion & inconvenience: Inflation changes the yardstick we

use to measure transactions.

Complicates long-range planning and the comparison of dollar amounts over time.

.يغير التضخم المقياس الذي نستخدمه لقياس المعامالت: االرتباك واإلزعاج

التخطيط بعيد المدى ومقارنة المبالغ الدوالرية بمرور الوقتتعقد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Costs of Inflation

▪ Tax distortions: التشوهات الضريبية:

Inflation makes nominal income grow faster than real income.

Taxes are based on nominal income,

and some are not adjusted for inflation.

So, inflation causes people to pay more taxes even when their real incomes

don’t increase.

.التضخم يجعل الدخل االسمي ينمو أسرع من الدخل الحقيقي

.تعتمد الضرائب على الدخل االسمي ، وبعضها ال يتم تعديله للتضخم

.يزيد دخلهم الحقيقيلذا ، فإن التضخم يدفع الناس لدفع مزيد من الضرائب حتى عندما ال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Tax distortions

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

You deposit $1000 in the bank for one year.

CASE 1: inflation = 0%, nom. interest rate = 10%

CASE 2: inflation = 10%, nom. interest rate = 20%

a. In which case does the real value of your deposit

grow the most?

Assume the tax rate is 25%.

b. In which case do you pay the most taxes?

c. Compute the after-tax nominal interest rate,

then subtract inflation to get the

after-tax real interest rate for both cases.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

a. In which case does the real value of your deposit grow the most?

In both cases, the real interest rate is 10%,

so the real value of the deposit grows 10% (before taxes).

Deposit = $1000.

CASE 1: inflation = 0%, nom. interest rate = 10%

CASE 2: inflation = 10%, nom. interest rate = 20%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

b. In which case do you pay the most taxes?

CASE 1: interest income = $100,

so you pay $25 in taxes.

CASE 2: interest income = $200, so you pay $50 in taxes.

Deposit = $1000. Tax rate = 25%.

CASE 1: inflation = 0%, nom. interest rate = 10%

CASE 2: inflation = 10%, nom. interest rate = 20%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

c. Compute the after-tax nominal interest rate, then subtract inflation to get the

after-tax real interest rate for both cases.

CASE 1: nominal = 0.75 x 10% = 7.5%

real = 7.5% – 0% = 7.5%

CASE 2: nominal = 0.75 x 20% = 15%

real = 15% – 10% = 5%

Deposit = $1000. Tax rate = 25%.

CASE 1: inflation = 0%, nom. interest rate = 10%

CASE 2: inflation = 10%, nom. interest rate = 20%

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Summary and lessons

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Inflation…

▪ raises nominal interest rates (Fisher effect)

but not real interest rates

▪ increases savers’ tax burdens

▪ lowers the after-tax real interest rate

Deposit = $1000. Tax rate = 25%.

CASE 1: inflation = 0%, nom. interest rate = 10%

CASE 2: inflation = 10%, nom. interest rate = 20%

A Special Cost of Unexpected Inflation • Arbitrary redistributions of wealth إعادة التوزيع التعسفية للثروة ▪

Higher-than-expected inflation transfers purchasing power from creditors to

debtors: Debtors get to repay their debt with dollars that aren’t worth as much.

• على المدينين أن يسددوا ديونهم : إن التضخم األعلى من المتوقع ينقل القوة الشرائية من الدائنين إلى المدينين .بالدوالر التي ال تستحق قيمتها

Lower-than-expected inflation transfers purchasing power from debtors to

creditors.

High inflation is more variable and less predictable than low inflation.

.القوة الشرائية من المدينين إلى الدائنينينقل انخفاض التضخم أقل من المتوقع

.التضخم العالي هو أكثر تنوعا وأقل قابلية للتنبؤ من انخفاض التضخم

So, these arbitrary redistributions are frequent when inflation is high.

لذا ، فإن عمليات التوزيع العشوائية هذه تكون متكررة عندما يكون التضخم مرتفعًا

The Costs of Inflation ▪ All these costs are quite high for economies

experiencing hyperinflation.

▪ For economies with low inflation (< 10% per year),

these costs are probably much smaller,

though their exact size is open to debate.

• .كل هذه التكاليف عالية للغاية بالنسبة لالقتصادات التي تعاني من تضخم شديد

• ً 10أقل من )بالنسبة لالقتصادات ذات معدل التضخم المنخفض ، من المحتمل أن تكون هذه ( ٪ سنويا التكاليف أقل من ذلك بكثير ، على الرغم من أن حجمها الدقيق مفتوح للنقاش

CONCLUSION

▪ This chapter explains one of the Ten Principles

of economics:

Prices rise when the govt prints

too much money.

▪ We saw that money is neutral in the long run,

affecting only nominal variables.

▪ In later chapters, we will see that money has

important effects in the short run on real

variables like output and employment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• To explain inflation in the long run, economists use

the quantity theory of money. According to this theory, the price level

depends on the quantity of money, and the inflation rate depends on the

money growth rate.

• وفقًا لهذه النظرية ، يعتمد . ولتفسير التضخم على المدى الطويل ، يستخدم االقتصاديون نظرية كمية المال .مستوى السعر على كمية المال ، ويعتمد معدل التضخم على معدل نمو المال

• The classical dichotomy is the division of variables

into real and nominal. The neutrality of money is the idea that changes in

the money supply affect nominal variables but not real ones. Most

economists believe these ideas describe the economy in the long run.

• إن حيادية المال هي فكرة أن التغيرات في . واسميةحقيقية تقسيم المتغيرات إلى الثنائي هو االنقسام يعتقد معظم االقتصاديين أن . المعروض من النقود تؤثر على المتغيرات اإلسمية وليس المتغيرات الحقيقية

.هذه األفكار تصف االقتصاد على المدى الطويل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The inflation tax is the loss in the real value of people’s money holdings when the government causes inflation by printing money.

• التضخم هي الخسارة في القيمة الحقيقية ألموال األشخاص عندما تتسبب الحكومة في التضخم عن ضريبة طريق طباعة النقود

• The Fisher effect is the one-for-one relation between changes in the inflation rate and changes in the nominal interest rate.

• .تأثير فيشر هو عالقة واحدة لواحد بين التغيرات في معدل التضخم والتغيرات في معدل الفائدة االسمي

• The costs of inflation include menu costs, shoeleather costs, confusion and

inconvenience, distortions in relative prices and the allocation of resources,

tax distortions, and arbitrary redistributions of wealth.

• تشمل تكاليف التضخم تكاليف القوائم وتكاليف األحذية والتشويش واإلزعاج والتشوهات في األسعار النسبية وتخصيص الموارد والتشوهات الضريبية وعمليات إعادة التوزيع التعسفية للثروة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How are international flows of goods and assets

related?

• What’s the difference between the real and nominal exchange rate?

• What is “purchasing-power parity,” and how does it explain nominal exchange rates?

Introduction

▪ One of the Ten Principles of Economics

from Chapter 1:

Trade can make everyone better off.

▪ This chapter introduces basic concepts of

international macroeconomics:

▪ The trade balance (trade deficits, surpluses)

▪ International flows of assets

▪ Exchange rates

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Closed vs. Open Economies االقتصاديات المغلقه والمفتوحه مهم التفريق بينهم

▪ A closed economy does not interact with other economies in the

world.

▪ An open economy interacts freely with other economies around the

world.

▪ .العالماالقتصادات األخرى في ال يتفاعل مع المغلق االقتصاد

▪ .مع االقتصادات األخرى في جميع أنحاء العالمبحرية يتفاعل االقتصاد المفتوح

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Flow of Goods & Servicesمهم

▪ Exports:

domestically-produced g&s sold abroad

▪ Imports:

foreign-produced g&s sold domestically

▪ Net exports (NX), aka the trade balance = value of exports – value of imports

▪ وتباع في الخارجالسلع والخدمات المنتجة محليا : الصادرات

▪ السلع والخدمات األجنبية التي يتم بيعها محليًا: الواردات

▪ قيمة -قيمة الصادرات = ويعرف أيضا باسم الميزان التجاري ، (NXصافي الصادرات الواردات)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Variables that Influence Net Exportsمهم المتغيرات التي تؤثر على صافي الصادرات

▪ Consumers’ preferences for foreign and domestic goods

▪ Prices of goods at home and abroad

▪ Incomes of consumers at home and abroad

▪ The exchange rates at which foreign currency trades for domestic currency

▪ Transportation costs

▪ Govt policies

▪ المتغيرات التي تؤثر على تفضيالت صافي المستهلكين للسلع األجنبية والمحلية

▪ أسعار السلع في الداخل والخارج

▪ دخل المستهلكين في الداخل والخارج

▪ أسعار الصرف التي يتم بها تداول العمالت األجنبية للعملة المحلية

▪ تكلفة النقل

▪ سياسات الحكومة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

العجز والفائض التجاري Trade Surpluses & Deficitsمهم جدا

NX measures the imbalance in a country’s trade in goods and services. .عدم التوازن في تجارة البلد في السلع والخدمات NXيقيس مؤشر

▪ Trade deficit:

an excess of imports over exports

▪ Trade surplus:

an excess of exports over imports

▪ Balanced trade:

when exports = imports

▪ زيادة في الواردات على الصادرات: العجز التجاري

▪ فائض الصادرات على الواردات: الفائض التجاري

▪ الواردات= عندما تكون الصادرات : التجارة المتوازنة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Flow of Capital تدفق راس المال مهم التعريف

▪ Net capital outflow (NCO):

domestic residents’ purchases of foreign assets minus foreigners’ purchases of domestic assets

▪ مشتريات المقيمين المحليين لألصول األجنبية ناقًصا :(NCOصافي التدفقات الرأسمالية ( األجانب لألصول المحليةمشتريات

▪ NCO is also called net foreign investment.

▪ أيضا تسمى صافي االستثمار االجنبي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Flow of Capital

The flow of capital abroad takes two forms: شكلينيأخذ تدفق رأس المال في الخارج

▪ Foreign direct investment:

Domestic residents actively manage the foreign investment, e.g.,

McDonalds opens a fast-food outlet in Moscow.

▪ Foreign portfolio investment:

Domestic residents purchase foreign stocks or bonds, supplying “loanable funds” to a foreign firm.

▪ يدير السكان المحليون بنشاط االستثمار األجنبي ، على سبيل المثال ، يفتح : االستثمار األجنبي المباشر .مطعم ماكدونالدز منفذًا للوجبات السريعة في موسكو

▪ أمواالً قابلة "يشتري السكان المحليون األسهم أو السندات األجنبية ، ويقدمون : استثمارات المحافظ األجنبية .لشركة أجنبية" للقرض

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Flow of Capital مهم جدا

NCO measures the imbalance in a country’s trade in assets:

:عدم التوازن في تجارة البلد في األصولالمال الخارج يقيس صافي تدفق رأس

▪ When NCO > 0, “capital outflow” Domestic purchases of foreign assets exceed foreign purchases of domestic assets.

▪ When NCO < 0, “capital inflow” Foreign purchases of domestic assets exceed domestic purchases of foreign assets.

▪ عندما تكون صافي تدفقات الرأسماليه الخارجه اكبر من صفر فإن المشتريات المحلية من الموجودات .األجنبية تتجاوز المشتريات األجنبية من األصول المحلية

▪ فإن المشتريات االجنبيه لألصول المحليه الرأسماليه الخارجه اقل من صفر عندما تكون صافي التدفقات تتعدى المشتريات المحليه من األصول االجنبيه

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

المتغيرات التي تؤثر على صافي Variables that Influence NCOمهم التدفقات النقديه الخارجه

▪ Real interest rates paid on foreign assets

▪ Real interest rates paid on domestic assets

▪ Perceived risks of holding foreign assets

▪ Govt policies affecting foreign ownership of domestic assets

▪ أسعار الفائدة الحقيقية المدفوعة على األصول األجنبية

▪ أسعار الفائدة الحقيقية المدفوعة على األصول المحلية

▪ المخاطر المتوقعة من االحتفاظ بالموجودات األجنبية

▪ سياسات الحكومة التي تؤثر على الملكية األجنبية لألصول المحلية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Equality of NX and NCOمومهم

▪ An accounting identity: NCO = NX

▪ arises because every transaction that affects

NX also affects NCO by the same amount

(and vice versa)

▪ When a foreigner purchases a good

from the U.S.,

▪ U.S. exports and NX increase

▪ the foreigner pays with currency or assets,

so the U.S. acquires some foreign assets,

causing NCO to rise.

& Saving, Investment, and International Flows of Goodsمهم Assets

Y = C + I + G + NX accounting identity

Y – C – G = I + NX rearranging terms

S = I + NX since S = Y – C – G

S = I + NCO since NX = NCO

▪ When S > I, the excess loanable funds flow abroad in the form of positive

net capital outflow.

▪ When S < I, foreigners are financing some of the country’s investment, and NCO < 0.

• تتدفق األموال الزائدة القابلة لإلقراض إلى الخارج في شكل تدفق رأس المال الصافي ، S> Iعندما .الموجب

• يقوم األجانب بتمويل بعض استثمارات البالد ، و ، S <Iعندما NCO <0.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Nominal Exchange Rate

▪ Nominal exchange rate: the rate at which one country’s currency trades for another

▪ السعر الذي تتداول به عملة بلد ما لحساب عملة أخرى: سعر الصرف االسمي

▪ We express all exchange rates as foreign currency per unit of domestic currency.

▪ Some exchange rates as of 20 May 2011, all per US$

Canadian dollar: 0.97

Euro: 0.71

Japanese yen: 81.67

Mexican peso: 11.65

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Appreciation and Depreciation

▪ Appreciation )or “strengthening”(: an increase in the value of a currency as measured by the amount of foreign currency it can buy

▪ Depreciation )or “weakening”(: a decrease in the value of a currency as measured by the amount of foreign currency it can buy

▪ زيادة في قيمة عملة ما مقاسة بمقدار العملة األجنبية التي يمكنها شرائها"(: تقوية"أو )تقدير

▪ انخفاض في قيمة العملة مقاسة بمقدار العملة األجنبية التي يمكنها شراؤها"(: الضعف"أو )االستهالك

▪ Examples: During 2007, the U.S. dollar… ▪ depreciated 9.5% against the Euro

▪ appreciated 1.5% against the S. Korean Won

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

سعر الصرف الحقيقي The Real Exchange Rateمهم

▪ Real exchange rate: the rate at which the g&s of one country trade for the

g&s of another

▪ السعر الذي تتداول به السلع والخدمات في بلد ما من أجل سلع وخدمات أخرى

▪ Real exchange rate =

where

P = domestic price

P* = foreign price (in foreign currency)

e = nominal exchange rate, i.e., foreign

currency per unit of domestic currency

e x P

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Example With One Good

▪ A Big Mac costs $2.50 in U.S., 400 yen in Japan

▪ e = 120 yen per $

▪ e x P = price in yen of a U.S. Big Mac

= (120 yen per $) x ($2.50 per Big Mac)

= 300 yen per U.S. Big Mac

▪ Compute the real exchange rate:

300 yen per U.S. Big Mac

400 yen per Japanese Big Mac =

e x P

* = 0.75 Japanese Big Macs per U.S. Big Mac

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Interpreting the Real Exchange Rate

“The real exchange rate = 0.75 Japanese Big Macs per U.S. Big Mac”

Correct interpretation:

To buy a Big Mac in the U.S.,

a Japanese citizen must sacrifice

an amount that could purchase

0.75 Big Macs in Japan.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Compute a real exchange rateمهم

e = 10 pesos per $

price of a tall Starbucks Latte

P = $3 in U.S., P* = 24 pesos in Mexico

A. What is the price of a U.S. latte measured in

pesos?

B. Calculate the real exchange rate,

measured as Mexican lattes per U.S. latte.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

e = 10 pesos per $

price of a tall Starbucks Latte

P = $3 in U.S., P* = 24 pesos in Mexico

A. What is the price of a U.S. latte in pesos?

e x P = (10 pesos per $) x (3 $ per U.S. latte)

= 30 pesos per U.S. latte

B. Calculate the real exchange rate.

30 pesos per U.S. latte

24 pesos per Mexican latte =

e x P

* = 1.25 Mexican lattes per U.S. latte

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Real Exchange Rate With Many Goods

P = U.S. price level, e.g., Consumer Price Index,

measures the price of a basket of goods

P* = foreign price level

Real exchange rate

= (e x P)/P*

= price of a domestic basket of goods relative to

price of a foreign basket of goods

▪ If U.S. real exchange rate appreciates, U.S. goods become more

expensive relative to foreign goods.

▪ إذا ارتفع سعر الصرف الحقيقي للواليات المتحدة ، فستصبح السلع األمريكية أكثر تكلفة مقارنة بالبضائع األجنبية.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Law of One Price قانون السعر الواحد

▪ Law of one price: the notion that a good should sell for the same priceمهم

in all markets

▪ األسواقالفكرة القائلة بضرورة بيع السلعة بنفس السعر في جميع

▪ Suppose coffee sells for $4/pound in Seattle and $5/pound in

Boston,

and can be costlessly transported.

▪ There is an opportunity for arbitrage, making a quick profit by buying coffee in Seattle and selling it in

Boston.

▪ Such arbitrage drives up the price in Seattle and drives down the price in Boston, until the two prices are equal.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Purchasing-Power Parity (PPP) تعادل القوة الشرائية

▪ :Purchasing-power parityمهم

a theory of exchange rates whereby a unit of any currency should be able to buy the same quantity of goods in all

countries

▪ based on the law of one price

▪ implies that nominal exchange rates adjust

to equalize the price of a basket of goods across countries

نظرية أسعار الصرف التي بموجبها يجب أن تكون وحدة من أي عملة قادرة على شراء نفس الكمية من البضائع البلدانفي جميع

السعر الواحدعلى أساس قانون

يشير ضمنا إلى أن أسعار الصرف االسمي تتكيف لتعادل سعر سلة من السلع عبر البلدان

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Purchasing-Power Parity (PPP)

▪ Example: The “basket” contains a Big Mac. P = price of U.S. Big Mac (in dollars)

P* = price of Japanese Big Mac (in yen)

e = exchange rate, yen per dollar

▪ According to PPP, e x P = P*

price of Japanese Big Mac, in yen

▪ Solve for e: P*

P e =

price of U.S. Big Mac, in yen

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PPP and Its Implications

▪ PPP implies that the nominal

exchange rate between two countries

should equal the ratio of price levels. ▪ يشير تعادل القوة الشرائية إلى أن سعر الصرف االسمي بين البلدين ينبغي أن يساوي نسبة مستويات األسعار

▪ If the two countries have different inflation rates, then e will change

over time:

▪ :إذا كان لدى الدولتين معدالت تضخم مختلفة ، فسوف يتغير البريد مع مرور الوقت

▪ If inflation is higher in Mexico than in the U.S., then P* rises faster than

P, so e rises—

the dollar appreciates against the peso.

▪ If inflation is higher in the U.S. than in Japan, then P rises faster than

P*, so e falls—

the dollar depreciates against the yen.

P e =

Limitations of PPP Theory الحد من نظرية تعادل القوة الشرائية

Two reasons why exchange rates do not always adjust to equalize prices

across countries:

:هناك سببان لعدم تعديل أسعار الصرف دائًما لمساواة األسعار عبر البلدان

▪ Many goods cannot easily be traded

▪ Examples: haircuts, going to the movies

▪ Price differences on such goods cannot be arbitraged away

▪ Foreign, domestic goods not perfect substitutes

▪ E.g., some U.S. consumers prefer Toyotas over Chevys, or vice versa

▪ Price differences reflect taste differences

– العديد من السلع ال يمكن تداولها بسهولة – حالقة الشعر ، الذهاب إلى السينما: أمثلة

– ال يمكن تحكيم الفروق السعرية في هذه السلع

– السلع األجنبية والمحلية ليست بدائل كاملة – أو العكس ، Chevysعلى Toyotasعلى سبيل المثال ، يفضل بعض المستهلكين في الواليات المتحدة

– اختالفات السعر تعكس اختالفات الطعم

Limitations of PPP Theory

▪ Nonetheless, PPP works well in many cases, especially as an explanation

of long-run trends.

▪ For example, PPP implies:

the greater a country’s inflation rate, the faster its currency should depreciate

(relative to a low-inflation country like the US).

▪ The data support this prediction…

• ومع ذلك ، فإن تعادل القوة الشرائية يعمل جيًدا في العديد من الحاالت ، خاصة كتوضيح لالتجاهات طويلة .المدى

• كلما زاد معدل التضخم في البلد ، كلما انخفضت قيمة : على سبيل المثال ، يشير تعادل القوة الشرائية إلى أنه (.نسبة إلى بلد منخفض التضخم مثل الواليات المتحدة)عملته

• البيانات تدعم هذا التنبؤ

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Chapter review questionsمهم

1. Which of the following statements about a country

with a trade deficit is not true?

A. Exports < imports

B. Net capital outflow < 0

C. Investment < saving

D. Y < C + I + G

2. A Ford Escape SUV sells for $24,000 in the U.S.

and 720,000 rubles in Russia.

If purchasing-power parity holds, what is the

nominal exchange rate (rubles per dollar)?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A trade deficit means NX < 0.

Since NX = S – I,

a trade deficit implies I > S.

1. Which of the following statements about a country

with a trade deficit is not true?

A. Exports < imports

B. Net capital outflow < 0

C. Investment < saving

D. Y < C + I + G

not true

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

2. A Ford Escape SUV sells for $24,000 in the

U.S. and 720,000 rubles in Russia.

If purchasing-power parity holds, what is the

nominal exchange rate (rubles per dollar)?

P* = 720,000 rubles

P = $24,000

e = P*/P = 720000/24000 = 30 rubles per dollar

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Net exports equal exports minus imports.

Net capital outflow equals domestic residents’ purchases of foreign assets minus foreigners’ purchases of domestic assets.

• إن صافي التدفقات الخارجة من رأس المال يساوي . صافي الصادرات يساوي الصادرات ناقص الواردات مشتريات المقيمين المحليين لألصول األجنبية ناقًصا مشتريات األجانب لألصول المحلية

• Every international transaction involves the exchange of an asset for

a good or service, so net exports equal net capital outflow.

• تشتمل كل معاملة دولية على تبادل أحد األصول مقابل سلعة أو خدمة ، وبالتالي فإن صافي .الصادرات يساوي التدفق الصافي لرأس المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Saving can be used to finance domestic investment or to buy assets

abroad. Thus, saving equals domestic investment plus net capital outflow.

• وبالتالي ، فإن . يمكن استخدام االدخار لتمويل االستثمار المحلي أو لشراء األصول في الخارج .االدخار يساوي االستثمار المحلي باإلضافة إلى صافي تدفق رأس المال

• The nominal exchange rate is the relative price of the currency of

two countries.

• .سعر الصرف االسمي هو السعر النسبي للعملة في بلدين

• The real exchange rate is the relative price of the goods and

services of the two countries.

• سعر الصرف الحقيقي هو السعر النسبي للسلع والخدمات للبلدين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• According to the theory of purchasing-power parity, a unit of any country’s currency should be able to buy the same quantity of goods in all countries.

• ووفقاً لنظرية تعادل القوة الشرائية ، ينبغي أن تكون وحدة عملة أي بلد قادرة على شراء نفس الكمية من .البضائع في جميع البلدان

• This theory implies that the nominal exchange rate between two countries

should equal the ratio of the price levels in the two countries.

• تشير هذه النظرية إلى أن سعر الصرف االسمي بين البلدين يجب أن يساوي نسبة مستويات األسعار في .البلدين

• It also implies that countries with high inflation should have depreciating

currencies.

• كما يعني ضمناً أن البلدان ذات التضخم المرتفع يجب أن يكون لديها عمالت مخفضة القيمة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• In an open economy, what determines the real

interest rate? The real exchange rate?

• How are the markets for loanable funds and

foreign-currency exchange connected?

• How do government budget deficits affect the

exchange rate and trade balance?

• How do other policies or events affect the

interest rate, exchange rate, and trade balance?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Introduction

▪ The previous chapter explained the basic

concepts and vocabulary of the open economy:

net exports (NX), net capital outflow (NCO),

and exchange rates.

▪ This chapter ties these concepts together into a

theory of the open economy.

▪ We will use this theory to see how govt policies

and various events affect the trade balance,

exchange rate, and capital flows.

▪ We start with the loanable funds market…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market for Loanable Funds

▪ An identity from the preceding chapter:

S = I + NCO

Saving Domestic

investment

Net capital outflow

▪ Supply of loanable funds = saving.

▪ A dollar of saving can be used to finance

▪ the purchase of domestic capital

▪ the purchase of a foreign asset

▪ So, demand for loanable funds = I + NCO

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market for Loanable Funds

▪ Recall:

▪ S depends positively on the real interest rate, r.

▪ I depends negatively on r.

▪ االدخار يعتمد بشكل إيجابي على معدل الفائده«عالقه طرديه« كلما زاد معدل الفائده زاد االدخار

▪ االستثمار يعتمد بشكل سلبي على معدل الفائده«عالقه عكسيه« كلما زاد معدل الفائده في البنوك قل االستثمار

▪ What about NCO?

How NCO Depends on the Real Interest Rate

The real interest rate, r,

is the real return on

domestic assets.

A fall in r makes domestic assets less

attractive

relative to foreign assets.

▪ People in the U.S. purchase more foreign

assets.

▪ People abroad purchase fewer U.S.

assets.

▪ NCO rises.

– سعر الفائدة الحقيقي ، هو العائد الحقيقي على األصول .المحلية

– إن انخفاض سعر الفائدة يجعل األصول المحلية أقل جاذبية .بالنسبة لألصول األجنبية

– يشتري األشخاص في الواليات المتحدة المزيد من األصول .األجنبية

– يشتري األشخاص في الخارج أصواًل أقل في الواليات .المتحدة

– NCO يرتفع.

NCO

Net capital outflow

NCO1 NCO2

D = I + NCO

r adjusts to balance supply

and demand in the LF market.

The Loanable Funds Market Diagram

S = saving

Loanable funds

Both I and NCO

depend negatively on r,

so the D curve is

downward-sloping.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Budget deficits and capital flows

▪ Suppose the government runs a budget deficit

(previously, the budget was balanced).

▪ Use the appropriate diagrams to determine

the effects on the real interest rate and

net capital outflow.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The higher r makes U.S. bonds more attractive relative

to foreign bonds, reduces NCO.

A budget deficit reduces saving and the supply of LF,

causing r to rise.

NCO

NCO1

Net capital outflow r

Loanable funds

r2 r2

When working with this model, keep in mind:

the LF market determines r (in left graph),

then this value of r determines NCO (in right graph).

The Market for Foreign-Currency Exchange

▪ Another identity from the preceding chapter:

NCO = NX

Net exports Net capital

outflow

▪ In the market for foreign-currency exchange,

▪ NX is the demand for dollars:

Foreigners need dollars to buy U.S. net exports.

▪ NCO is the supply of dollars:

U.S. residents sell dollars to obtain the foreign

currency they need to buy foreign assets.

The Market for Foreign-Currency Exchange

▪ Recall: The U.S. real exchange rate (E) measures the quantity of foreign goods & services

that trade for one unit of U.S. goods & services.

▪ E is the real value of a dollar in the market for foreign-currency

exchange.

– كمية السلع والخدمات األجنبية المتداولة األمريكي سعر الصرف الحقيقي يقيس (E)

– .واحدة من السلع والخدمات األمريكية لوحدة

– E القيمة الحقيقية للدوالر في السوق لتبادل العمالت األجنبيةهو

S = NCO

The Market for Foreign-Currency Exchange

Dollars

D = NX

An increase in E has no effect on

saving or investment, so it does not

affect NCO or the supply of dollars.

لها أي تأثير على سعر الصرف ليس في الزيادة االدخار أو االستثمار ، لذلك ال يؤثر على صافي

.تدفق رأس المال أو المعروض من الدوالرات

E adjusts to balance supply and

demand for dollars in the market

for foreign- currency exchange. سعر الصرف يضبط لموازنة العرض والطلب على الدوالر في السوق لتبادل

العمالت االجنبيه

An increase in E makes U.S. goods

more expensive to foreigners, reduces

foreign demand for U.S. goods—and

U.S. dollars.

إلى زيادة تكلفة السلع األمريكية زيادة الصرف تؤدي -لألجانب ، وتقليل الطلب األجنبي على السلع األمريكية

األمريكيوالدوالر

FYI: Disentangling Supply and Demand

When a U.S. resident buys imported goods,

does the transaction affect supply or demand

in the foreign exchange market? Two views:

1. The supply of dollars increases.

The person needs to sell her dollars to obtain the

foreign currency she needs to buy the imports.

2. The demand for dollars decreases. The increase in imports reduces NX,

which we think of as the demand for dollars.

(So, NX is really the net demand for dollars.)

Both views are equivalent. For our purposes,

it’s more convenient to use the second.

FYI: Disentangling Supply and Demand

When a foreigner buys a U.S. asset,

does the transaction affect supply or demand

in the foreign exchange market? Two views: 1. The demand for dollars increases.

The foreigner needs dollars in order to purchase the U.S. asset.

2. .يزداد الطلب على الدوالر

3. األمريكيةيحتاج األجنبي إلى دوالرات من أجل شراء األصول

2. The supply of dollars falls.

The transaction reduces NCO, which we think of

as the supply of dollars.

3. عرض الدوالر ينخفض

4. .هذه الصفقة تقلل من صافي تدفق األموال ، الذي نفكر فيه على أنه المعروض من الدوالرات

(So, NCO is really the net supply of dollars.)

Again, both views are equivalent. We will use the second.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Budget deficit, exchange rate, and NX

▪ Initially, the government budget is balanced and

trade is balanced (NX = 0).

▪ Suppose the government runs a budget deficit.

As we saw earlier, r rises and NCO falls.

▪ How does the budget deficit affect the U.S. real

exchange rate? The balance of trade?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The budget deficit reduces NCO and the

supply of dollars.

The real exchange rate appreciates,

reducing net exports.

Since NX = 0 initially,

the budget deficit causes a trade deficit

(NX < 0).

S1 = NCO1 E

Dollars

D = NX

S2 = NCO2

Market for foreign- currency exchange

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY: The Effects of a Budget Deficit آثار عجز الميزانية: تلخيص

▪ National saving falls

▪ The real interest rate rises

▪ Domestic investment and net capital outflow

both fall

▪ The real exchange rate appreciates

▪ Net exports fall (or, the trade deficit increases)

▪ يسقطاالدخار الوطني

▪ سعر الفائدة الحقيقي يرتفع

▪ حد سواءتسقط على االستثمار المحلي وصافي رأس المال الخارجة

▪ يرتفعسعر الصرف الحقيقي

▪ ( أو يزيد العجز التجاري)الصادرات تنخفض صافي

SUMMARY: The Effects of a Budget Deficit

▪ One other effect:

As foreigners acquire more domestic assets,

the country’s debt to the rest of the world increases.

▪ Due to many years of budget and trade deficits,

the U.S. is now the “world’s largest debtor nation.”

International Investment Position of the U.S.

31 December 2009

Value of U.S.-owned foreign assets $18.4 trillion

Value of foreign-owned U.S. assets $21.1 trillion

U.S.’ net debt to the rest of the world $2.7 trillion

SUMMARY: The Effects of a Budget Deficit

▪ One other effect:

As foreigners acquire more domestic assets,

the country’s debt to the rest of the world increases.

▪ Due to many years of budget and trade deficits,

the U.S. is now the “world’s largest debtor nation.”

International Investment Position of the U.S.

31 December 2009

Value of U.S.-owned foreign assets $18.4 trillion

Value of foreign-owned U.S. assets $21.1 trillion

U.S.’ net debt to the rest of the world $2.7 trillion

The Connection Between Interest Rates and Exchange Rates

NCO

dollars

NCO

D = NX

S1 = NCO1 S2

Anything that increases r

will reduce NCO

and the supply of

dollars in the foreign

exchange market.

Result:

The real exchange rate appreciates.

NCO1 NCO2

Keep in mind:

The LF market (not shown)

determines r.

This value of r

then determines NCO

(shown in upper graph).

This value of NCO then

determines supply of

dollars in foreign exchange

market (in lower graph).

The Connection Between Interest Rates and Exchange Rates

NCO

dollars

NCO

D = NX

S1 = NCO1 S2

Anything that increases r

will reduce NCO

and the supply of

dollars in the foreign

exchange market.

Result:

The real exchange rate appreciates.

NCO1 NCO2

Keep in mind:

The LF market (not shown)

determines r.

This value of r

then determines NCO

(shown in upper graph).

This value of NCO then

determines supply of

dollars in foreign exchange

market (in lower graph).

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Investment incentives

▪ Suppose the government provides new

tax incentives to encourage investment.

▪ Use the appropriate diagrams to determine how

this policy would affect:

▪ the real interest rate

▪ net capital outflow

▪ the real exchange rate

▪ net exports

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

NCO

Net capital outflow r

Loanable funds

r1 r1

r rises,

causing NCO to fall.

NCO1 NCO2

Investment—and the demand for LF—increase at each value of r.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The fall in NCO reduces the

supply of dollars

in the foreign exchange market.

The real exchange

rate appreciates,

reducing net exports.

S1 = NCO1 E

Dollars

D = NX

S2 = NCO2

Market for foreign- currency exchange

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Budget Deficit vs. Investment Incentives

▪ A tax incentive for investment has similar effects

as a budget deficit:

▪ r rises, NCO falls

▪ E rises, NX falls

▪ But one important difference: ▪ Investment tax incentive increases investment, which increases

productivity growth and living standards in the long run.

▪ Budget deficit reduces investment,

which reduces productivity growth and living standards.

▪ يزيد الحافز الضريبي لالستثمار من االستثمار ، مما يزيد من نمو اإلنتاجية ومستويات المعيشة على .المدى الطويل

▪ عجز الميزانية يقلل من االستثمار ، مما يقلل من نمو اإلنتاجية ومستويات المعيشة.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Trade Policy

▪ Trade policy:

a govt policy that directly influences the quantity of

g&s that a country imports or exports

▪ Examples:

▪ Tariff – a tax on imports

▪ Import quota – a limit on the quantity of

imports

▪ “Voluntary export restrictions” – the govt

pressures another country to restrict its exports;

essentially the same as an import quota

Trade Policy

▪ Common reasons for policies that restrict imports:

▪ Save jobs in a domestic industry that has

difficulty competing with imports

▪ Reduce the trade deficit

▪ Do such trade policies accomplish these goals?

▪ Let’s use our model to analyze the effects of an import quota on cars from Japan

designed to save jobs in the U.S. auto industry.

An import quota does not affect saving or investment, so it does not affect NCO. (Recall: NCO = S – I.)

Analysis of a Quota on Cars from Japan

NCO

Net capital outflow r

Loanable funds

r1 r1

Analysis of a Quota on Cars from Japan

Since NCO unchanged, S curve does not shift.

The D curve shifts:

At each E,

imports of cars fall, so net exports rise,

D shifts to the right.

At E1, there is excess

demand in the foreign

exchange market.

E rises to restore eq’m.

S = NCO E

Dollars

Market for foreign- currency exchange

Analysis of a Quota on Cars from Japan

What happens to NX? Nothing!

▪ If E could remain at E1, NX would rise, and the

quantity of dollars demanded would rise.

▪ But the import quota does not affect NCO,

so the quantity of dollars supplied is fixed.

▪ Since NX must equal NCO, E must rise enough

to keep NX at its original level.

▪ Hence, the policy of restricting imports

does not reduce the trade deficit.

Analysis of a Quota on Cars from Japan

Does the policy save jobs?

The quota reduces imports of Japanese autos.

▪ U.S. consumers buy more U.S. autos.

▪ U.S. automakers hire more workers to produce

these extra cars.

▪ So the policy saves jobs in the U.S. auto industry.

But E rises, reducing foreign demand for U.S. exports.

▪ Export industries contract, exporting firms lay off

workers.

The import quota saves jobs in the auto industry

but destroys jobs in U.S. export industries!!

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CASE STUDY: Capital Flows from China

▪ In recent years, China has accumulated U.S. assets

to reduce its exchange rate and boost its exports.

▪ Results in U.S.:

▪ Appreciation of $ relative to Chinese renminbi

▪ Higher U.S. imports from China

▪ Larger U.S. trade deficit

▪ Some U.S. politicians want China to stop,

argue for restricting trade with China to protect

some U.S. industries.

▪ Yet, U.S. consumers benefit, and the net effect of

China’s currency intervention is probably small.

Political Instability and Capital Flight

▪ 1994: Political instability in Mexico made world

financial markets nervous.

▪ People worried about the safety of Mexican

assets they owned.

▪ People sold many of these assets, pulled their

capital out of Mexico.

▪ Capital flight: a large and sudden reduction in

the demand for assets located in a country

▪ We analyze this using our model, but from the

perspective of Mexico, not the U.S.

The equilibrium values of r and NCO both increase. As foreign investors sell their assets and pull out their capital, NCO increases at each value of r. Demand for LF = I + NCO. The increase in NCO increases demand for LF.

Capital Flight from Mexico

NCO

NCO1

Net capital outflow r

Loanable funds

NCO2

Capital Flight from Mexico

The increase in NCO causes an increase in

the supply of pesos in

the foreign exchange market.

The real exchange rate

value of the peso falls.

S2 = NCO2

Market for foreign- currency exchange

Pesos

S1 = NCO1

CONCLUSION

▪ The U.S. economy is becoming increasingly

open:

▪ Trade in g&s is rising relative to GDP.

▪ Increasingly, people hold international assets in

their portfolios and firms finance investment

with foreign capital.

CONCLUSION

▪ Yet, we should be careful not to blame our

problems on the international economy.

▪ Our trade deficit is not caused by

other countries’ “unfair” trade practices, but by our own low saving.

▪ Stagnant living standards are not caused by

imports, but by low productivity growth.

▪ When politicians and commentators

discuss international trade and finance,

the lessons of this and the preceding chapter

can help separate myth from reality.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• In an open economy, the real interest rate

adjusts to balance the supply of loanable funds

(saving) with the demand for loanable funds

(domestic investment and net capital outflow).

• In the market for foreign-currency exchange,

the real exchange rate adjusts to balance the

supply of dollars (net capital outflow) with the

demand for dollars (net exports).

• Net capital outflow is the variable that connects

these markets.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A budget deficit reduces national saving, drives

up interest rates, reduces net capital outflow,

reduces the supply of dollars in the foreign

exchange market, appreciates the exchange

rate, and reduces net exports.

• A policy that restricts imports does not affect net

capital outflow, so it cannot affect net exports or

improve a country’s trade deficit. Instead, it drives up the exchange rate and reduces

exports as well as imports.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Political instability may cause capital flight,

as nervous investors sell assets and pull their

capital out of the country. As a result, interest

rates rise and the country’s exchange rate falls. This occurred in Mexico in 1994 and in other

countries more recently.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are economic fluctuations? What are their

characteristics?

• How does the model of aggregate demand and

aggregate supply explain economic fluctuations?

• Why does the Aggregate-Demand curve slope

downward? What shifts the AD curve?

• What is the slope of the Aggregate-Supply curve

in the short run? In the long run?

What shifts the AS curve(s)?

Introduction

▪ Over the long run, real GDP grows about

3% per year on average.

▪ In the short run, GDP fluctuates around its trend.

▪ Recessions: periods of falling real incomes

and rising unemployment

▪ Depressions: severe recessions (very rare)

▪ Short-run economic fluctuations are often called business cycles.

• .٪ سنويا في المتوسط 3على المدى الطويل ، ينمو الناتج المحلي اإلجمالي الحقيقي حوالي

.على المدى القصير ، يتذبذب الناتج المحلي اإلجمالي حول اتجاهه

البطالةفترات انخفاض الدخول الحقيقية وارتفاع معدالت : فترات الركود

(نادر جدا)الركود الشديد : الكساد االقتصادي

.غالباً ما تسمى التقلبات االقتصادية قصيرة المدى دورات األعمال

Introduction, continuedمهم

▪ Explaining these fluctuations is difficult, and the theory of economic

fluctuations is controversial.

▪ Most economists use the model of

aggregate demand and aggregate supply

to study fluctuations.

▪ This model differs from the classical economic theories economists use to

explain the long run. • .تفسير هذه التقلبات أمر صعب ، ونظرية التقلبات االقتصادية مثيرة للجدل

• .يستخدم معظم االقتصاديين نموذج إجمالي الطلب وإجمالي العرض لدراسة التقلبات

الطويلهذا النموذج عن النظريات االقتصادية الكالسيكية التي يستخدمها االقتصاديون لتفسير المدى يختلف

يختلف النموذج ( 3..«المودل»االقتصاديين يستخدمون النموذج (2..ان التقلبات صعب التنبؤ بها(1« يعني» عن النظريه

Classical Economics—A Recap خالصة -االقتصاد الكالسيكي

▪ The previous chapters are based on the ideas of classical economics,

especially:

▪ The Classical Dichotomy, the separation of variables into two groups:

▪ Real – quantities, relative prices

▪ Nominal – measured in terms of money

▪ The neutrality of money:

Changes in the money supply affect nominal but not real variables.

• :تستند الفصول السابقة على أفكار االقتصاد الكالسيكي ، خاصة

• :الثنائية الكالسيكية ، فصل المتغيرات إلى مجموعتين

• الكميات الحقيقية ، األسعار النسبية

• االسمية - تقاس من حيث المال

• .تؤثر التغيرات في المعروض النقدي على المتغيرات االسمية وليس الحقيقية: حياد المال

Classical Economics—A Recap

▪ Most economists believe classical theory describes the world in the

long run, but not the short run.

▪ In the short run, changes in nominal variables (like the money

supply or P ) can affect real variables (like Y or the u-rate).

▪ To study the short run, we use a new model.

• يعتقد معظم االقتصاديين أن النظرية الكالسيكية تصف العالم على المدى الطويل ، ولكن ليس على .المدى القصير

• مثل عرض النقود أو )في المدى القصير ، قد تؤثر التغيرات في المتغيرات اإلسمية P) على مثل )المتغيرات الحقيقية Y أو معدلu).

• .لدراسة المدى القصير ، نستخدم نموذًجا جديًدا

The Model of Aggregate Demand and Aggregate Supply هذا النموذج ُيستخدم في المدى القصير: مالحظه

SRAS

The price level

Real GDP, the quantity of output

The model determines the

eq’m price level

and eq’m output (real GDP).

“Aggregate Demand”

“Short-Run

Aggregate

Supply”

The Aggregate-Demand (AD) Curve

The AD curve

shows the

quantity of

all g&s

demanded

in the economy

at any given

price level.

Why the AD Curve Slopes Downwardمهم

Y = C + I + G + NX

Assume G fixed

by govt policy.

To understand

the slope of AD,

must determine

how a change in P affects C,

I, and NX.

ثابتة بواسطة سياسة Gافترض .الحكومة

يجب تحديد كيفية ، ADلفهم منحدر و Iو Cعلى Pتأثير التغيير في NX

Y2 Y1

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Wealth Effect (P and C )

Suppose P rises.

▪ The dollars people hold buy fewer g&s,

so real wealth is lower.

▪ People feel poorer.

Result: C falls.

.لنفترض أن السعر يرتفع

.تقلإن الدوالرات التي يشتريها الناس تشتري بضائع وخدمات أقل ، لذا فإن الثروة الحقيقية

.الناس يشعرون بالفقر

االستهالك يقل: النتيجة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Interest-Rate Effect (P and I )مهم

Suppose P rises.

▪ Buying g&s requires more dollars.

▪ To get these dollars, people sell bonds or other assets.

▪ This drives up interest rates.

Result: I falls.

(Recall, I depends negatively on interest rates.)

.لنفترض أن السعر يرتفع

.شراء السلع والخدمات يتطلب المزيد من الدوالرات

.للحصول على هذه الدوالرات ، يبيع الناس السندات أو األصول األخرى

.هذا يدفع معدالت الفائدة

(.بشكل سلبي على أسعار الفائدةيعتمد , تذكر)انخفاض االستثمار : النتيجة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Exchange-Rate Effect (P and NX ) Suppose P rises.

▪ U.S. interest rates rise (the interest-rate effect).

▪ Foreign investors desire more U.S. bonds.

▪ Higher demand for $ in foreign exchange market.

▪ U.S. exchange rate appreciates.

▪ U.S. exports more expensive to people abroad, imports cheaper to U.S. residents.

Result: NX falls.

(.تأثير معدل الفائدة)أسعار الفائدة األمريكية ترتفع

.يرغب المستثمرون األجانب في المزيد من السندات األمريكية

.ارتفاع الطلب على الدوالر في سوق الصرف األجنبي

.يرتفعسعر الصرف في الواليات المتحدة

.الخارج ، والواردات أرخص بالنسبة لسكان الواليات المتحدةبالنسبه للناس في صادرات الواليات المتحدة أغلى

تسقط : النتيجة NX.

The Slope of the AD Curve: Summary

An increase in P reduces the

quantity of g&s demanded

because:

تؤدي الزيادة في السعر إلى تقليل كمية السلع :والخدمات المطلوبة بسبب

▪ the wealth effect (C

falls) ▪ تأثير الثروه

▪ the interest-rate effect (I

falls) تأثير معدل الفائده

▪ the exchange-rate effect

(NX falls) تأثير معدل سعر الصرف

Why the AD Curve Might Shift

Any event that changes C, I, G,

or NX—except a change in P— will shift the AD curve. مهم

Example:

A stock market boom

makes households feel

wealthier, C rises,

the AD curve shifts right.

AD1

AD2

Why the AD Curve Might Shift

▪ Changes in C

▪ Stock market boom/crash

▪ Preferences re: consumption/saving tradeoff

▪ Tax hikes/cuts

▪ Changes in I

▪ Firms buy new computers, equipment, factories

▪ Expectations, optimism/pessimism

▪ Interest rates, monetary policy

▪ Investment Tax Credit or other tax incentives

– التغييرات في االستهالك – تحطم/ ازدهار سوق األسهم

– إنقاذ المفاضلة/ استهالك : التفضيالت إعادة

– التخفيضات/ ارتفاع الضرائب

– التغييرات في االستثمار – تشتري الشركات أجهزة الكمبيوتر والمعدات والمصانع الجديدة

– التشاؤم/ التوقعات ، التفاؤل

– أسعار الفائدة ، السياسة النقدية – االئتمان الضريبي لالستثمار أو غيرها من الحوافز الضريبية

Why the AD Curve Might Shift

▪ Changes in G

▪ Federal spending, e.g., defense

▪ State & local spending, e.g., roads, schools

▪ Changes in NX

▪ Booms/recessions in countries that buy our exports

▪ Appreciation/depreciation resulting from international speculation in

foreign exchange market

– التغييرات في سياسة الحكومة – اإلنفاق الفيدرالي ، على سبيل المثال ، الدفاع

– اإلنفاق الحكومي والمحلي ، على سبيل المثال ، الطرق والمدارس – التغييرات في صافي الصرف

– الركود في البلدان التي تشتري صادراتنا/ الطفرات

– االستهالك الناتج عن المضاربة الدولية في سوق الصرف األجنبي/ التقدير

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

The Aggregate-Demand curve

What happens to the AD curve in each of the following scenarios?

في كل من السيناريوهات التالية؟ ADماذا يحدث لمنحنى

A. A ten-year-old investment tax credit expires.

B. The U.S. exchange rate falls.

C. A fall in prices increases the real value of consumers’ wealth.

D. State governments replace their sales taxes with new taxes on interest, dividends, and capital gains.

.تنتهي صالحية االئتمان الضريبي لالستثمار لمدة عشر سنوات

.ينخفض سعر صرف الدوالر األمريكي

.يؤدي انخفاض األسعار إلى زيادة القيمة الحقيقية لثروة المستهلكين. ج

تستبدل حكومات الواليات ضرائب المبيعات الخاصة بها بضرائب جديدة على الفوائد وأرباح األسهم . د .ومكاسب رأس المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

A. A ten-year-old investment tax credit expires.

I falls, AD curve shifts left.

B. The U.S. exchange rate falls.

NX rises, AD curve shifts right.

C. A fall in prices increases the real value of

consumers’ wealth. Move down along AD curve (wealth-effect).

D. State governments replace sales taxes with new taxes on interest, dividends, and capital gains.

C rises, AD shifts right.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Aggregate-Supply (AS ) Curves

The AS curve shows the total

quantity of

g&s firms produce and sell at

any given price level.

يوضح منحنى العرض الكلي الكمية اإلجمالية للسلع والخدمات التي تنتجها الشركات وتبيعها

.بأي مستوى سعر معين

SRAS

LRAS

AS is: مهم

▪ upward-sloping in short run

▪ االنحدار الصعودي في المدى القصير ▪ vertical in long

run الرأسي في المدى الطويل

The Long-Run Aggregate-Supply Curve (LRAS)

The natural rate of

output (YN) is the

amount of output

the economy produces

when unemployment

is at its natural rate.

YN is also called

potential output

full-employment

output.

LRAS

Why LRAS Is Vertical

YN determined by the

economy’s stocks of labor, capital, and natural resources,

and on the level of technology. تحددها مخزونات االقتصاد من رأس المال والعمالة والموارد الطبيعية ، وعلى مستوى

.التكنولوجيا

An increase in P

LRAS

does not affect

any of these,

so it does not

affect YN.

أي من هذه ، لذلك الزياده في السعر التؤثرعلى .YNال يؤثر على

(Classical dichotomy)

Why the LRAS Curve Might Shift

Any event that changes any of

the determinants of YN will shift

LRAS.

YN محدداتحدث يغير أي من أي

المدىالكلي طويل إلى تغيير العرض سيؤدي

Example:

Immigration

increases L,

causing YN to rise.

LRAS1

LRAS2

YN ’

Why the LRAS Curve Might Shift من العوامل التي تؤثر في انتقال منحنى العرض الكلي

▪ Changes in L or natural rate of unemployment

▪ Immigration

▪ Baby-boomers retire

▪ Govt policies reduce natural u-rate

▪ Changes in K or H

▪ Investment in factories, equipment

▪ More people get college degrees

▪ Factories destroyed by a hurricane

– الطبيعيمعدل البطالة التغيرات في العمال أو

– هجرة

– تقليل المواليد – معدل البطالة الطبيعيةتخفض سياسات الحكومة

– Hأو Kالتغييرات في

– االستثمار في المصانع والمعدات – المزيد من الناس يحصلون على شهادات جامعية

– المصانع التي دمرها اإلعصار

Why the LRAS Curve Might Shift

▪ Changes in natural resources

▪ Discovery of new mineral deposits

▪ Reduction in supply of imported oil

▪ Changing weather patterns that affect agricultural production

▪ Changes in technology

▪ Productivity improvements from technological progress

– الطبيعيةالتغييرات في الموارد

– اكتشاف حقول معدنيه جديده – انخفاض في المعروض من النفط المستورد

– تغير أنماط الطقس التي تؤثر على اإلنتاج الزراعي – التغيرات في التكنولوجيا

– تحسين االنتاجيه من التقدم التكنولوجي

LRAS1990

Using AD & AS to Depict

Long-Run Growth and Inflation

Over the long run,

tech. progress shifts

LRAS to the right

AD2000

LRAS2000

AD1990

Y2000

and growth in the

money supply shifts

AD to the right.

Y1990

AD2010

LRAS2010

Y2010

P1990 Result:

ongoing inflation

and growth in

output.

P2000

P2010

Short Run Aggregate Supply (SRAS)

The SRAS curve is upward sloping:

Over the period

of 1–2 years, an increase in P

SRAS

causes an increase in the

quantity of g & s

supplied. Y2

Why the Slope of SRAS Matters

If AS is vertical, fluctuations in AD do not cause fluctuations in output or employment.

AD1

SRAS

LRAS

ADhi

ADlo

If AS slopes up, then shifts in AD

do affect output

and employment.

Plo

Ylo

Phi

Yhi

Phi

Plo

Three Theories of SRAS

In each,

▪ some type of market imperfection

▪ result:

Output deviates from its natural rate

when the actual price level deviates

from the price level people expected.

– ينحرف الناتج عن المعدل الطبيعي عندما ينحرف مستوى السعر .الفعلي عن مستوى السعر المتوقع لألشخاص

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

1. The Sticky-Wage Theory

▪ Imperfection:

Nominal wages are sticky in the short run,

they adjust sluggishly.

▪ Due to labor contracts, social norms

▪ Firms and workers set the nominal wage in

advance based on PE, the price level they

expect to prevail.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

1. The Sticky-Wage Theory

▪ If P > PE,

revenue is higher, but labor cost is not.

Production is more profitable,

so firms increase output and employment.

▪ Hence, higher P causes higher Y,

so the SRAS curve slopes upward.

▪ اذا كان السعر الفعلي اكبر من السعر المتوقع

▪ .فإن اإليرادات أعلى ، ولكن تكلفة العمالة ليست كذلك

▪ .اإلنتاج أكثر ربحية ، لذلك الشركات تزيد اإلنتاج والعمالة

.الى اعلى « س ر ا س»منحنى لذلك ينحدر ،ارتفاع الناتج الفعلي، فإن السعر األعلى يؤدي إلى وبالتالي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. The Sticky-Price Theory

▪ Imperfection:

Many prices are sticky in the short run.

▪ Due to menu costs, the costs of adjusting

prices.

▪ Examples: cost of printing new menus,

the time required to change price tags

▪ Firms set sticky prices in advance based

on PE.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. The Sticky-Price Theory

▪ Suppose the Fed increases the money supply unexpectedly. In the long run, P will rise.

▪ In the short run, firms without menu costs can raise their prices immediately.

▪ Firms with menu costs wait to raise prices. Meanwhile, their prices are relatively low,

which increases demand for their products, so they increase output and employment.

▪ Hence, higher P is associated with higher Y, so the SRAS curve slopes upward.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3. The Misperceptions Theory

▪ Imperfection:

Firms may confuse changes in P with changes

in the relative price of the products they sell.

▪ If P rises above PE, a firm sees its price rise before

realizing all prices are rising.

The firm may believe its relative price is rising,

and may increase output and employment.

▪ So, an increase in P can cause an increase in Y,

making the SRAS curve upward-sloping.

What the 3 Theories Have in Common:

In all 3 theories, Y deviates from YN when

P deviates from PE.

Y = YN + a (P – PE)

Output

Natural rate of output (long-run)

a > 0,

measures how much Y responds to unexpected

changes in P

Actual price level

Expected price level

What the 3 Theories Have in Common:

SRAS

When P > PE

Y > YN

When P < PE

Y < YN

the expected price level

Y = YN + a (P – PE)

SRAS and LRAS

▪ The imperfections in these theories are

temporary. Over time,

▪ sticky wages and prices become flexible

▪ misperceptions are corrected

▪ In the LR,

▪ PE = P

▪ AS curve is vertical

LRAS

SRAS and LRAS

SRAS

In the long run,

PE = P

and

Y = YN.

Y = YN + a (P – PE)

Why the SRAS Curve Might Shift

Everything that shifts LRAS shifts SRAS, too.

Also, PE shifts SRAS:

If PE rises,

workers & firms set

higher wages.

At each P,

production is less profitable, Y falls,

SRAS shifts left.

LRAS P

SRAS

The Long-Run Equilibrium

In the long-run

equilibrium,

PE = P,

Y = YN ,

and unemployment

is at its natural rate.

SRAS

LRAS

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Economic Fluctuations التقلبات االقتصادية ▪ Caused by events that shift the AD and/or

AS curves.

▪ Four steps to analyzing economic fluctuations:

1. Determine whether the event shifts AD or AS.

2. Determine whether curve shifts left or right.

3. Use AD–AS diagram to see how the shift changes Y and P in the short run.

4.Use AD–AS diagram to see how economy

moves from new SR eq’m to new LR eq’m. 4. تسببها االحداث التي تحول منحنى الطلب الكلي او العرض الكلي

5. :خطوات لتحليل التقلبات االقتصاديه 4

6. تحديد ما اذا كان الحدث يحول الطلب الكلي او العرض الكلي

تحديد ما اذا كان المنحنى ينتقل الى اليسار او اليمين

استخدام مخطط الطلب او العرض الكلي لرؤية كيفية تحول تغيرات الناتج او السعر الفعلي في المدى القصير

استخدام مخطط منحنى الطلب او العرض لرؤية كيفية يتحرك االقتصاد من توازن س ر الجديد الى توازن ل ر الجديد

LRAS

The Effects of a Shift in AD Event: Stock market crash

انهيار سوق االسهم

1. Affects C, AD curve

2. C falls, so AD shifts left

3. SR eq’m at B. P and Y lower,

unemp higher

4. Over time, PE falls, SRAS shifts right,

until LR eq’m at C.

Y and unemp back at initial levels.

AD1

SRAS1

AD2

SRAS2 P1 A

P3 C

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Working with the model

▪ Draw the AD-SRAS-LRAS diagram

for the U.S. economy

starting in a long-run equilibrium.

▪ A boom occurs in Canada.

Use your diagram to determine

the SR and LR effects on U.S. GDP,

the price level, and unemployment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

LRAS

AD2

SRAS2

AD1

SRAS1

P3 C

Event: Boom in Canada

1. Affects NX, AD curve

2. Shifts AD right

3. SR eq’m at point B. P and Y higher,

unemp lower

4. Over time, PE rises, SRAS shifts left,

until LR eq’m at C. Y and unemp back at initial levels.

LRAS

The Effects of a Shift in SRAS Event: Oil prices rise

1. Increases costs, shifts SRAS (assume LRAS constant)

2. SRAS shifts left

3. SR eq’m at point B. P higher, Y lower, unemp higher

From A to B, stagflation, a period of falling output and rising prices.

AD1

SRAS1

SRAS2

P1 A

LRAS

Accommodating an Adverse Shift in SRAS

If policymakers do nothing,

4. Low employment causes wages to fall,

SRAS shifts right,

until LR eq’m at A.

AD1

SRAS1

SRAS2

P1 A

AD2

P3 C

Or, policymakers could use fiscal or monetary

policy to increase AD

and accommodate the AS shift:

Y back to YN, but

P permanently higher.

The 1970s Oil Shocks and Their Effects

# of unemployed persons

Real GDP

CPI

+ 1.4 million

+ 2.9%

+ 26%

+ 99%

+ 3.5 million

– 0.7%

+ 21%

+ 138% Real oil prices

1978–80 1973–75

CONCLUSION

▪ This chapter has introduced the model of

aggregate demand and aggregate supply,

which helps explain economic fluctuations.

▪ Keep in mind: these fluctuations are deviations

from the long-run trends explained by the

models we learned in previous chapters.

▪ In the next chapter, we will learn how

policymakers can affect aggregate demand

with fiscal and monetary policy.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Short-run fluctuations in GDP and other macroeconomic quantities

are irregular and unpredictable. Recessions are periods of falling real GDP and rising unemployment.

• التقلبات في المدى القصير في الناتج المحلي اإلجمالي وكميات االقتصاد الكلي األخرى غير منتظمة وغير .انخفاض الناتج المحلي اإلجمالي الحقيقي وارتفاع البطالةهي فترات الركود . متوقعة

• Economists analyze fluctuations using the model of aggregate

demand and aggregate supply.

• العرضيقوم االقتصاديون بتحليل التقلبات باستخدام نموذج إجمالي الطلب وإجمالي

• The aggregate demand curve slopes downward because a change in

the price level has a wealth effect on consumption, an interest-rate effect on investment, and an exchange-rate effect on net exports.

• ينحدر منحنى إجمالي الطلب إلى أسفل نظًرا ألن التغير في مستوى السعر له تأثير على االستهالك ، وتأثير .معدل الفائدة على االستثمار ، وتأثير سعر الصرف على صافي الصادرات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Anything that changes C, I, G, or NX—except a change in the price

level—will shift the aggregate demand curve. • الصادرات باستثناء التغيير في مستوى أي شي يغير االستهالك او االستثمار او االنفاق الحكومي او صافي

سيؤدي إلى تغيير منحنى إجمالي العرض -السعر

• The long-run aggregate supply curve is vertical because changes in the price level do not affect output in the long run.

• منحنى إجمالي العرض على المدى الطويل هو عمودي ألن التغيرات في مستوى السعر ال تؤثر على اإلنتاج على المدى الطويل

• In the long run, output is determined by labor, capital, natural resources, and technology; changes in any of these will shift the

long-run aggregate supply curve.

• على المدى الطويل ، يتم تحديد اإلنتاج من خالل العمل ورأس المال والموارد الطبيعية والتكنولوجيا ؛ .التغييرات في أي من هذه سوف تؤدي إلى إزاحة منحنى إجمالى العرض على المدى الطويل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• In the short run, output deviates from its natural rate when the price

level is different than expected, leading to an upward-sloping short- run aggregate supply curve. The three theories proposed to explain

this upward slope are the sticky wage theory, the sticky price theory,

and the misperceptions theory. • في المدى القصير ، ينحرف الناتج عن المعدل الطبيعي عندما يكون مستوى السعر مختلفًا عن المتوقع ، مما

النظريات الثالث المقترحة لشرح هذا . يؤدي إلى منحنى إجمالى العرض على المدى القصير الصاعد .المنحدر التصاعدي هي نظرية األجور اللزجة ، ونظرية األسعار الثابتة ، ونظرية سوء الفهم

• The short-run aggregate-supply curve shifts in response to changes

in the expected price level and to anything that shifts the long-run aggregate supply curve.

• ينحرف منحنى العرض الكلي على المدى القصير استجابة للتغيرات في مستوى السعر المتوقع وأي شيء .يغير منحنى العرض الكلي على المدى الطويل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Economic fluctuations are caused by shifts in aggregate demand

and aggregate supply. • .تحدث التقلبات االقتصادية بسبب التحوالت في إجمالي الطلب وإجمالي العرض

• When aggregate demand falls, output and the price level fall in the short run. Over time, a change in expectations causes wages,

prices, and perceptions to adjust, and the short-run aggregate supply curve shifts rightward. In the long run, the economy returns

to the natural rates of output and unemployment, but with a lower

price level.

• مع مرور . عندما ينخفض الطلب الكلي ، ينخفض اإلنتاج ومستوى السعر على المدى القصير الوقت ، يؤدي التغيير في التوقعات إلى تعديل األجور واألسعار والتصورات ، وينحرف منحنى

المدى الطويل ، يعود االقتصاد إلى معدالت على . اليمينإجمالي العرض على المدى القصير نحو .اإلنتاج والبطالة الطبيعية ، ولكن مع انخفاض مستوى األسعار

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A fall in aggregate supply results in stagflation— falling output and rising prices.

Wages, prices, and perceptions adjust over time,

and the economy recovers.

• يؤدي االنخفاض في إجمالي العرض إلى تضخم مصحوب بالركود ، تتكيف األجور واألسعار . وهو انخفاض اإلنتاج وارتفاع األسعار

.والتصورات بمرور الوقت ، ويتعافى االقتصاد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How does the interest-rate effect help explain the

slope of the aggregate-demand curve?

• How can the central bank use monetary policy to

shift the AD curve?

• In what two ways does fiscal policy affect

aggregate demand?

• What are the arguments for and against

using policy to try to stabilize the economy?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Introduction

▪ Earlier chapters covered:

▪ the long-run effects of fiscal policy

on interest rates, investment, economic

growth

▪ the long-run effects of monetary policy

on the price level and inflation rate

▪ This chapter focuses on the short-run effects

of fiscal and monetary policy,

which work through aggregate demand.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Aggregate Demandمهم

▪ Recall, the AD curve slopes downward for three reasons:

▪ حاالت 3ينتقل المنحنى في

▪ The wealth effect

▪ The interest-rate effect

▪ The exchange-rate effect ▪ تأثير الثروة ▪ تأثير سعر الفائدة ▪ الصرفتأثير سعر

▪ Next:

A supply-demand model that helps explain the interest-rate effect and how monetary policy affects aggregate demand.

▪ نموذج العرض والطلب الذي يساعد على تفسير تأثير سعر الفائدة وكيف تؤثر السياسة النقدية على : التالي .إجمالي الطلب

the most important of these effects for the U.S. economy أهم هذه التأثيرات على اقتصاد

الواليات المتحدة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Theory of Liquidity Preference نظرية تفضيل السيولة

▪ A simple theory of the interest rate (denoted r)

▪ r adjusts to balance supply and demand for money

▪ Money supply: assume fixed by central bank, does not depend on

interest rate

▪ (بالرمز ريشار إليه )نظرية بسيطة لمعدل الفائدة

▪ التوازن بين العرض والطلب على المالر يضبط

▪ افتراض ثابت من قبل البنك المركزي ، ال يعتمد على سعر الفائدة: العرض النقدي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Theory of Liquidity Preference

▪ Money demand reflects how much wealth people want to hold in

liquid form.

▪ For simplicity, suppose household wealth

▪ .يعكس الطلب على النقود مقدار الثروة التي يريد الناس االحتفاظ بها في شكل سائل

▪ المنزليةمن أجل البساطة ، افترض الثروة

▪ includes only two assets: يتضمن فقط اثنين من األصول:

▪ Money – liquid but pays no interest فائدة سائل لكنه ال يدفع أي -المال

▪ Bonds – pay interest but not as liquid سائالدفع الفائدة ولكن ليس -السندات

▪ A household’s “money demand” reflects its preference for liquidity.

▪ The variables that influence money demand:

Y, r, and P.

▪ .الخاص باألسرة تفضيله للسيولة" طلب المال"يعكس

▪ والسعر, الناتج القومي, معدل الفائده النقودالتي تؤثر على الطلب على المتغيرات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Money Demand

▪ Suppose real income (Y) rises. Other things

equal, what happens to money demand?

▪ If Y rises:

▪ Households want to buy more g&s,

so they need more money.

▪ To get this money, they attempt to sell some of

their bonds.

▪ I.e., an increase in Y causes an increase in money demand, other things

equal.

▪ واالشياء األخرى متساويه, الزياده في الدخل يسبب الزياده في طلب المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

The determinants of money demand

A. Suppose r rises, but Y and P are unchanged.

What happens to money demand?

B. Suppose P rises, but Y and r are unchanged.

What happens to money demand?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

A. Suppose r rises, but Y and P are unchanged.

What happens to money demand?

r is the opportunity cost of holding money.

An increase in r reduces money demand:

households attempt to buy bonds to take

advantage of the higher interest rate.

Hence, an increase in r causes a decrease in

money demand, other things equal.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

B. Suppose P rises, but Y and r are unchanged.

What happens to money demand?

If Y is unchanged, people will want to buy the

same amount of g&s.

Since P is higher, they will need more money to

do so.

Hence, an increase in P causes an increase in

money demand, other things equal.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How r Is Determined

MS curve is vertical: Changes in r do not

affect MS, which is

fixed by the Fed.

MD curve is

downward sloping:

A fall in r increases

money demand.

Interest rate MS

MD1

Quantity fixed by the Fed

Eq’m interest

rate

How the Interest-Rate Effect Works

Interest rate

MD1

MD2

Y1 Y2

A fall in P reduces money demand, which lowers r.

A fall in r increases I and the quantity of g&s demanded.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Monetary Policy and Aggregate Demand السياسة النقدية والطلب الكلي

▪ To achieve macroeconomic goals, the Fed can use monetary policy to shift the AD

curve.

▪ The Fed’s policy instrument is MS.

▪ The news often reports that the Fed targets the interest rate.

▪ More precisely, the federal funds rate, which banks charge each other on short-

term loans

▪ To change the interest rate and shift the AD curve,

the Fed conducts open market operations

to change MS.

▪ .لتحقيق أهداف االقتصاد الكلي ، يمكن لالحتياطي الفيدرالي استخدام السياسة النقدية لتحويل منحنى الطلب اإلجمالي

▪ العرض النقديأداة السياسة الفيدرالية هي

▪ .غالباً ما تفيد األخبار أن البنك الفيدرالي يستهدف سعر الفائدة

▪ بتعبير أدق ، سعر الفائدة على األموال الفيدرالية ، التي تتقاضاها البنوك بعضها البعض على القروض قصيرة األجل

▪ لتغيير سعر الفائدة وتحويل منحنى الطلب اإلجمالي ، يقوم البنك الفيدرالي بإجراء عمليات السوق المفتوحة لتغيير العرض .النقدي

The Effects of Reducing the Money Supplyمهم تاثيرات خفض عرض النقود

Interest rate

AD1

MS1

MS2

AD2

The Fed can raise r by reducing the money supply. .يمكن لالحتياطي الفيدرالي رفع سعر الفائدة عن طريق خفض المعروض من النقود

An increase in r reduces the quantity of goods & services demanded. .يقلل من كمية السلع والخدمات المطلوبةمعدل الفائده زيادة في

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Monetary policy

For each of the events below,

- determine the short-run effects on output

- determine how the Fed should adjust the money

supply and interest rates to stabilize output

A. Congress tries to balance the budget by cutting

govt spending.

B. A stock market boom increases household

wealth.

C. War breaks out in the Middle East,

causing oil prices to soar.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

A. Congress tries to balance the budget by

cutting govt spending.

This event would reduce agg demand and

output.

To stabilize output, the Fed should increase MS

and reduce r to increase agg demand.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

B. A stock market boom increases household

wealth.

This event would increase agg demand,

raising output above its natural rate.

To stabilize output, the Fed should reduce MS

and increase r to reduce agg demand.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

C. War breaks out in the Middle East,

causing oil prices to soar.

This event would reduce agg supply,

causing output to fall.

To stabilize output, the Fed should increase MS

and reduce r to increase agg demand.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Liquidity traps مصيدة السيوله

▪ Monetary policy stimulates aggregate demand by reducing the interest rate.

▪ .السياسة النقدية تحفز الطلب الكلي عن طريق خفض سعر الفائدة

▪ Liquidity trap: when the interest rate is zero

▪ هو عندما يصبح سعر الفائده صفر

▪ In a liquidity trap, mon. policy may not work, since nominal interest rates

cannot be reduced further.

▪ .في فخ السيولة ، قد ال تعمل السياسة النقدية ، حيث ال يمكن تخفيض أسعار الفائدة االسمية أكثر من ذلك

▪ However, central bank can make real interest rates negative by raising

inflation expectations.

▪ .ومع ذلك ، يمكن للبنك المركزي جعل أسعار الفائدة الحقيقية سلبية عن طريق رفع توقعات التضخم

▪ Also, central bank can conduct open-market ops using other assets—like

mortgages and corporate debt—thereby lowering rates on these kinds of

loans. The Fed pursued this option in 2008–2009.

▪ مثل القروض -أيضا ، يمكن للبنك المركزي إجراء العمليات المفتوحة في السوق باستخدام األصول األخرى وبالتالي تخفيض أسعار الفائدة على هذه األنواع من القروض -العقارية والديون الشركات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Fiscal Policy and Aggregate Demand السياسة المالية والطلب الكلي ▪ Fiscal policy: the setting of the level of govt spending and taxation by govt

policymakers

▪ الحكومةتحديد مستوى اإلنفاق الحكومي وفرض الضرائب من قبل واضعي السياسات في : السياسة المالية

▪ مهم«أنواع السياسه الماليه«

▪ Expansionary fiscal policy

▪ an increase in G and/or decrease in T

▪ shifts AD right

▪ Contractionary fiscal policy

▪ a decrease in G and/or increase in T

▪ shifts AD left

▪ السياسة المالية التوسعية ▪ أو االنخفاض في الضرائب/ زيادة في اإلنفاق الحكومي و

▪ نقل الطلب الكلي الى اليمين ▪ سياسة مالية انكماشية

▪ أو زيادة الضرائب/ انخفاض في اإلنفاق الحكومي و

▪ نقل الطلب الكلي الى اليسار

▪ Fiscal policy has two effects on AD للسياسة المالية تأثيران على إجمالي الطلب

تأثير مضاعف The Multiplier Effect.1مهم ▪ If the govt buys $20b of planes from Boeing, Boeing’s revenue increases by

$20b.

▪ This is distributed to Boeing’s workers )as wages( and owners )as profits or stock dividends).

▪ These people are also consumers and will spend a portion of the extra

income.

▪ This extra consumption causes further increases in aggregate demand.

• .مليار دوالر 20مليار دوالر من طائرات بوينج ، فستزيد أرباح بوينج بمقدار 20إذا اشترت الحكومة

• (.أو أرباح األسهمكأرباح )والمالك ( كأجور)يتم توزيع هذا على عمال بوينغ

• .هؤالء الناس هم أيضا مستهلكون وسوف ينفقون جزًءا من الدخل اإلضافي

• .هذا االستهالك اإلضافي يسبب مزيًدا من الزيادات في إجمالي الطلب

Multiplier effect: the additional shifts in ADمهم

that result when fiscal policy increases income and thereby increases

consumer spending

التحوالت اإلضافية في الطلب اإلجمالي التي تنتج عندما تزيد السياسة المالية الدخل : مضاعفتاألثير وبالتالي تزيد من إنفاق المستهلك

1. The Multiplier Effect

A $20b increase in G initially shifts AD

to the right by $20b.

The increase in Y causes C to rise,

which shifts AD

further to the right.

AD1

AD2 AD3

Y1 Y3 Y2

$20 billion

Marginal Propensity to Consume الميل الهامشي لالستهالك

▪ How big is the multiplier effect?

It depends on how much consumers respond to increases in income.

• .ما هو حجم التأثير المضاعف؟ يعتمد ذلك على مدى استجابة المستهلكين للزيادات في الدخل

▪ :Marginal propensity to consume (MPC)مهم جدا the fraction of extra income that households consume rather than save

E.g., if MPC = 0.8 and income rises $100,

C rises $80.

االدخارمن الدخل اإلضافي الذي تستهلكه األسر بدالً من جزء

مثال: اذا كان الميل الهامشي لالستهالك= صفر وارتفع الدخل لـ 100 دوالر

دوال 80االستهالك يرتفع الى

Notation: ΔG is the change in G,

ΔY and ΔC are the ultimate changes in Y and C

Y = C + I + G + NX identity

ΔY = ΔC + ΔG I and NX do not change

ΔY = MPC ΔY + ΔG because ΔC = MPC ΔY

solved for ΔY 1

1 – MPC ΔY = ΔG

A Formula for the Multiplierمهم جدا

The multiplier

The size of the multiplier depends on MPC.

E.g., if MPC = 0.5 multiplier = 2

if MPC = 0.75 multiplier = 4

if MPC = 0.9 multiplier = 10

A Formula for the Multiplierمهم جدا

1 1 – MPC

ΔY = ΔG

The multiplier

A bigger MPC means

changes in Y cause

bigger changes in C,

which in turn cause

more changes in Y.

Other Applications of the Multiplier Effect

▪ The multiplier effect:

Each $1 increase in G can generate more than a $1 increase in agg

demand. • يمكن لكل زيادة في اإلنفاق الحكومي بقيمة دوالر واحد أن تحقق أكثر من دوالر واحد زيادة في : التأثير المضاعف

إجمالي الطلب

▪ Also true for the other components of GDP.

• .صحيح أيضا بالنسبة للمكونات األخرى للناتج المحلي اإلجمالي

Example: Suppose a recession overseas reduces demand for U.S. net exports by

$10b.

Initially, agg demand falls by $10b.

The fall in Y causes C to fall, which further reduces agg demand and income.

مليارات 10لنفترض أن الركود في الخارج يقلل من الطلب على الصادرات الصافية للواليات المتحدة بمقدار : مثال .دوالر

.مليار دوالر 10في البداية ، ينخفض الطلب الكلي بمقدار

يؤدي إلى انخفاض االستهالك ، مما يقلل من الطلب الكلي والدخل« الناتج القومي«االنخفاض في الدخل

2. The Crowding-Out Effect

▪ Fiscal policy has another effect on AD that works in the opposite direction.

▪ A fiscal expansion raises r,

which reduces investment,

which reduces the net increase in agg demand.

.المالية تأثير آخر على الطلب اإلجمالي الذي يعمل في االتجاه المعاكسللسياسة

التوسع المالي يرفع المعدل مما يقلل من االستثمار ،

مما يقلل من الزيادة الصافية في الطلب اإلجمالي

▪ So, the size of the AD shift may be smaller than the initial fiscal

expansion.

▪ .This is called the crowding-out effectمهم

• .لذا ، قد يكون حجم التحول في اإلعالن أقل من التوسيع المالي األولي

• هذا ما يسمى تأثير المزاحمة.

How the Crowding-Out Effect Works

Interest rate

AD1

MD2

MD1

P1 r1

A $20b increase in G initially shifts AD right by $20b

But higher Y increases MD and r, which reduces AD.

AD3 AD2

Y1 Y2

$20 billion

Changes in Taxes التغييرات في الضرائب

▪ A tax cut increases households’ take-home pay.

▪ Households respond by spending a portion of this extra income, shifting AD to the

right.

▪ The size of the shift is affected by the multiplier and crowding-out effects.

▪ Another factor: whether households perceive the tax cut to be temporary or

permanent.

▪ A permanent tax cut causes a bigger increase in C—and a bigger shift in the AD

curve—than a temporary tax cut.

– .تخفيض الضرائب يزيد من رواتب األسر المنزلية

– .تستجيب األسر عن طريق إنفاق جزء من هذا الدخل اإلضافي ، وتحويل الطلب الكلي إلى اليمين

– .يتأثر حجم النقلة بالتأثيرات المضاعفة والمزاحمة

– .ما إذا كانت األسر ترى أن التخفيض الضريبي مؤقت أو دائم: عامل آخر

– من -وتحويل أكبر في منحنى الطلب اإلجمالي -يؤدي خفض الضرائب الدائم إلى زيادة االستهالك بشكل أكبر .تخفيض ضريبي مؤقت

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Fiscal policy effects

The economy is in recession.

Shifting the AD curve rightward by $200b

would end the recession.

A. If MPC = .8 and there is no crowding out,

how much should Congress increase G

to end the recession?

B. If there is crowding out, will Congress need to

increase G more or less than this amount?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

The economy is in recession.

Shifting the AD curve rightward by $200b

would end the recession.

A. If MPC = .8 and there is no crowding out,

how much should Congress increase G

to end the recession?

Multiplier = 1/(1 – .8) = 5

Increase G by $40b

to shift agg demand by 5 x $40b = $200b.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

The economy is in recession.

Shifting the AD curve rightward by $200b

would end the recession.

B. If there is crowding out, will Congress need to

increase G more or less than this amount?

Crowding out reduces the impact of G on AD.

To offset this, Congress should increase G by

a larger amount.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Fiscal Policy and Aggregate Supply

▪ Most economists believe the short-run effects of fiscal policy mainly work through agg demand.

▪ But fiscal policy might also affect agg supply.

▪ .يعتقد معظم االقتصاديين أن اآلثار قصيرة األجل للسياسة المالية تعمل بشكل رئيسي من خالل الطلب الكلي

▪ لكن السياسة المالية قد تؤثر أيًضا على إجمالي العرض

▪ Recall one of the Ten Principles from Chapter 1:

People respond to incentives.

▪ A cut in the tax rate gives workers incentive to work more, so it might increase the quantity of g&s supplied and shift AS to the right.

▪ People who believe this effect is large are called “Supply-siders.”

▪ إن تخفيض معدل الضريبة يمنح العمال حافًزا للعمل بشكل أكبر ، لذلك قد يزيد من كمية السلع والخدمات المقدمة ويحول .التجميع اإلجمالي إلى اليمين

▪ "العرض وزيادة العرض"ويطلق على األشخاص الذين يعتقدون أن هذا التأثير كبيًرا اسم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Fiscal Policy and Aggregate Supply

▪ Govt purchases might affect agg supply. Example:

▪ Govt increases spending on roads.

▪ Better roads may increase business productivity, which increases the

quantity of g&s supplied, shifts AS to the right.

▪ This effect is probably more relevant in the long run: it takes time to build

the new roads and put them into use.

▪ :مثال. قد تؤثر المشتريات الحكومية على اإلمداد بالزئبق

▪ .الحكومة تزيد اإلنفاق على الطرق

▪ قد تؤدي الطرق األفضل إلى زيادة إنتاجية العمل ، مما يزيد من كمية السلع والخدمات المقدمة ، وينقل إلى .اليمين

▪ يستغرق األمر بعض الوقت لبناء الطرق الجديدة : قد يكون هذا التأثير أكثر مالءمة على المدى الطويل .ووضعها قيد االستخدام

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Using Policy to Stabilize the Economy

▪ Since the Employment Act of 1946, economic

stabilization has been a goal of U.S. policy.

▪ Economists debate how active a role the govt

should take to stabilize the economy.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Case for Active Stabilization Policy

▪ Keynes: “Animal spirits” cause waves of pessimism and optimism among households

and firms, leading to shifts in aggregate demand

and fluctuations in output and employment.

▪ Also, other factors cause fluctuations, e.g.,

▪ booms and recessions abroad

▪ stock market booms and crashes

▪ If policymakers do nothing, these fluctuations

are destabilizing to businesses, workers,

consumers.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Case for Active Stabilization Policy

▪ Proponents of active stabilization policy

believe the govt should use policy

to reduce these fluctuations:

▪ When GDP falls below its natural rate,

use expansionary monetary or fiscal policy

to prevent or reduce a recession.

▪ When GDP rises above its natural rate,

use contractionary policy to prevent or reduce

an inflationary boom.

The Case Against Active Stabilization Policy

▪ Monetary policy affects economy with a long lag:

▪ Firms make investment plans in advance,

so I takes time to respond to changes in r.

▪ Most economists believe it takes at least

6 months for mon policy to affect output and

employment.

▪ Fiscal policy also works with a long lag:

▪ Changes in G and T require acts of Congress.

▪ The legislative process can take months or

years.

The Case Against Active Stabilization Policy

▪ Due to these long lags, critics of active policy

argue that such policies may destabilize the

economy rather than help it:

By the time the policies affect agg demand,

the economy’s condition may have changed. ▪ These critics contend that policymakers should

focus on long-run goals like economic growth

and low inflation.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Automatic Stabilizers المثبتات التلقائية

▪ Automatic stabilizers:

changes in fiscal policy that stimulate

agg demand when economy goes into

recession, without policymakers having to take

any deliberate action

▪ التغييرات في السياسة المالية التي تحفز الطلب الكلي عندما يمر االقتصاد في حالة ركود ، دون أن يتخذ صانعو السياسات أي إجراء

متعمد

Automatic Stabilizers: Examples

▪ The tax system

▪ In recession, taxes fall automatically,

which stimulates agg demand.

▪ Govt spending

▪ In recession, more people apply for public assistance (welfare,

unemployment insurance).

▪ Govt spending on these programs automatically rises, which stimulates

agg demand.

– النظام الضريبي – .في حالة الركود ، تنخفض الضرائب تلقائيًا ، مما يحفز الطلب الكلي

– اإلنفاق الحكومي – الرعاية االجتماعية ، التأمين ضد )في حالة الركود ، يتقدم عدد أكبر من الناس بطلب المساعدة العامة

(.البطالة

– اإلنفاق الحكومي على هذه البرامج يرتفع تلقائيًا ، مما يحفز الطلب الكلي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ Policymakers need to consider all the effects of

their actions. For example,

▪ When Congress cuts taxes, it should consider

the short-run effects on agg demand and

employment, and the long-run effects

on saving and growth.

▪ When the Fed reduces the rate of money

growth, it must take into account not only the

long-run effects on inflation but the short-run

effects on output and employment.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• In the theory of liquidity preference, the interest rate adjusts to

balance the demand for money with the supply of money. • النقودفي نظرية تفضيل السيولة ، يتم تعديل سعر الفائدة لموازنة الطلب على النقود مع عرض

• The interest-rate effect helps explain why the aggregate-demand

curve slopes downward: an increase in the price level raises money demand, which raises

the interest rate, which reduces investment, which reduces the aggregate quantity of goods & services demanded.

• الزيادة في مستوى : يساعد تأثير معدل الفائدة في تفسير انحدار منحنى إجمالي الطلب إلى أسفل السعر ترفع الطلب على النقود ، مما يرفع سعر الفائدة ، مما يقلل االستثمار ، مما يقلل من إجمالي .كمية السلع والخدمات المطلوبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• An increase in the money supply causes the interest rate to fall,

which stimulates investment and shifts the aggregate demand curve

rightward. • تؤدي زيادة العرض النقدي إلى انخفاض سعر الفائدة ، مما يحفز االستثمار ويحول منحنى إجمالي

الطلب إلى اليمين

• Expansionary fiscal policy—a spending increase or tax cut—shifts

aggregate demand to the right. Contractionary fiscal policy shifts

aggregate demand to the left.

• إلى تحويل الطلب الكلي -أي زيادة اإلنفاق أو خفض الضرائب -تؤدي السياسة المالية التوسعية تغير السياسة المالية االنكماشية الطلب الكلي على اليسار. إلى اليمين

•

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• When the government alters spending or taxes, the resulting shift in

aggregate demand can be larger or smaller than the fiscal change:

• The multiplier effect tends to amplify the effects of fiscal policy on

aggregate demand.

• The crowding-out effect tends to dampen the effects of fiscal

policy on aggregate demand. • عندما تقوم الحكومة بتغيير اإلنفاق أو الضرائب ، يمكن أن يكون التحول الناتج في إجمالي الطلب أكبر

:أو أصغر من التغيير المالي

• .يميل التأثير المضاعف إلى تضخيم تأثيرات السياسة المالية على إجمالي الطلب

• .يميل تأثير االزدحام إلى تخفيف تأثيرات السياسة المالية على الطلب الكلي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Economists disagree about how actively policymakers should try to

stabilize the economy. • .يختلف االقتصاديون حول مدى فعالية صانعي السياسة في محاولة تثبيت استقرار االقتصاد

• Some argue that the government should use

fiscal and monetary policy to combat destabilizing fluctuations in output and

employment.

• .يختلف االقتصاديون حول مدى فعالية صانعي السياسة في محاولة تثبيت استقرار االقتصاد

• Others argue that policy will end up destabilizing the economy because policies work with long lags.

• يجادل آخرون بأن السياسة سوف تؤدي إلى زعزعة استقرار االقتصاد ألن السياسات تعمل مع .الفترات الطويلة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ten Principles of

Economics Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

What are the arguments on both sides of each of the following debates?

• Should policymakers try to stabilize the economy?

• Should fiscal policy fight recessions with spending hikes or tax cuts?

• Should monetary policy be made by rule or discretion?

• Should the central bank aim for zero inflation?

• Should the government balance its budget?

• Should the tax laws be reformed to encourage saving?

Introduction

▪ This course has introduced you to the tools

economists use to analyze the behavior of the

economy as a whole and the impact of policies

on the economy.

▪ This final chapter presents both sides in six

classic debates over macroeconomic policy.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

1. Should Policymakers Try to Stabilize the Economy?

هل يجب أن يحاول صانعو السياسة استقرار االقتصاد؟

Arguments for active stabilization:

▪ Left on their own, economies tend to fluctuate.

E.g., pessimism of households and firms causes a fall in agg demand, which causes a recession.

▪ Policymakers can “lean against the wind,” i.e. use monetary & fiscal policy to stabilize

agg demand, output, and employment.

▪ A more stable economy benefits everyone.

▪ الحجج لتحقيق االستقرار النشط:

▪ على سبيل المثال ، يتسبب تشاؤم األسر والشركات في . وإذا تراجعت االقتصادات بمفردها ، فإنها تميل إلى التذبذب .انخفاض الطلب ، والذي يسبب الركود

▪ ، أي استخدام السياسة النقدية والمالية لتحقيق االستقرار في إجمالي " أن يتكئوا ضد الريح"يمكن لواضعي السياسات .الطلب واالنتاج والعمالة

▪ إن االقتصاد األكثر استقراًرا يفيد الجميع

1. Should Policymakers Try to Stabilize the Economy?

Arguments against active stabilization:

▪ Monetary & fiscal policy work with long lags,

so policy must act in advance of economic changes.

▪ But the shocks that cause fluctuations are unpredictable, and forecasting is highly

imprecise.

▪ If policy takes effect too late, it will worsen fluctuations.

▪ So, leave economy to its own devices.

• الحجج ضد االستقرار النشط: • .تعمل السياسة النقدية والمالية مع الفترات الطويلة ، لذا يجب أن تعمل السياسة قبل التغيرات االقتصادية

• .لكن الصدمات التي تسبب التقلبات ال يمكن التنبؤ بها ، والتنبؤ بها غير دقيق إلى حد كبير

• .إذا دخلت السياسة حيز التنفيذ بعد فوات األوان ، فستزيد التقلبات سوًءا

• لذا ، اترك االقتصاد ألجهزته الخاصة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Active stabilization policy

▪ Would you be more likely to support active

stabilization policy if wages, prices, and

expectations adjust quickly in response to

economic changes, or if they adjust slowly?

▪ هل من األرجح أن تدعم سياسة التثبيت النشط إذا كانت األجور استجابة للتغيرات االقتصادية بسرعة في واألسعار والتوقعات تتكيف

، أو إذا كانت تتكيف ببطء؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

▪ If wages, prices, and expectations adjust slowly,

it will take longer for the economy to return to its natural

rates of output and employment.

▪ قتاً وألمر ق ايستغرف فسوء ، ببطت لتطلعار واألسعار واألجواجعت اترإذا .لعمالةواتج الطبيعية للنوالى معدالته د إالقتصاد اليعول طوأ

▪ In that case, there’s a better chance that expansionary policy will act in time to alleviate the recession, rather

than push the economy into an inflationary boom.

▪ في هذه الحالة ، هناك فرصة أفضل أن تعمل السياسة التوسعية في الوقت المناسب لتخفيف الركود ، بدالً من دفع االقتصاد إلى طفرة تضخمية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. Should the Government Fight Recessions with Spending Hikes or Tax

Cuts? الحكومة محاربة الركود مع ارتفاع اإلنفاق أو التخفيضات هل ينبغي على

الضريبية؟

Arguments for fighting recessions with spending:

▪ Each $ of govt spending adds directly to aggregate demand, but only part of

each $ of a tax cut does because consumers save part of it.

▪ Since most states must keep balanced budgets, federal spending given to

states can prevent states from laying off public workers, saving jobs.

• حجج لمحاربة الركود واإلنفاق:

• ويضيف كل إنفاق حكومي من الدوالرات مباشرة إلى إجمالي الطلب ، لكن جزًءا فقط من كل دوالر من .التخفيضات الضريبية يحدث ألن المستهلكين يوفرون جزًءا منه

• وبما أن معظم الدول يجب أن تحتفظ بميزانيات متوازنة ، فإن اإلنفاق الفيدرالي الممنوح للواليات يمكن أن يمنع .الدول من تسريح العاملين في القطاع العام ، مما يوفر فرص العمل

2. Should the Government Fight Recessions with Spending Hikes or Tax Cuts?

Arguments for fighting recessions with tax cuts:

▪ Tax cuts increase households’ disposable income and therefore increase consumption spending.

▪ Tax cuts can increase aggregate demand with incentives—like the investment tax credit.

▪ Tax cuts can increase aggregate supply by increasing the incentive to work and produce g&s.

▪ Rapid spending increases may be wasteful )“bridges to nowhere”( and will require future tax increases.

• حجج لمحاربة الركود مع تخفيضات ضريبية:

• .وتؤدي التخفيضات الضريبية إلى زيادة الدخل المتاح لألسر وبالتالي زيادة اإلنفاق االستهالكي

• .مثل االئتمان الضريبي لالستثمار -يمكن التخفيضات الضريبية زيادة الطلب الكلي مع الحوافز

• يمكن التخفيضات الضريبية زيادة العرض الكلي عن طريق زيادة الحافز للعمل وإنتاج السلع والخدمات • .وسوف تتطلب زيادات ضريبية في المستقبل"( الجسور إلى أي مكان)"قد تكون الزيادة السريعة في اإلنفاق مسرفة

3. Should Monetary Policy Be Made by Rule or Discretion? هل يجب صنع السياسة النقدية من خالل القاعدة أو السلطة التقديرية؟

▪ The Federal Reserve has almost complete discretion over monetary policy.

▪ Some argue that the Fed should be forced to follow a rule, such as

▪ constant money growth rate

▪ inflation targeting:

▪ increase money growth rate

if inflation is below target

▪ decrease money growth rate

if inflation is above target

• .لدى االحتياطي الفيدرالي تقريبًا تقديرية كاملة بشأن السياسة النقدية

• يجادل البعض أن بنك االحتياطي الفيدرالي يجب أن يضطر إلى اتباع قاعدة ، مثل • معدل نمو المال الثابت

• :استهداف التضخم

• زيادة معدل نمو المال إذا كان التضخم أقل من الهدف

• انخفاض معدل نمو المال إذا كان التضخم فوق الهدف

3. Should Monetary Policy Be Made by Rule or Discretion?

Arguments against discretion:

▪ Allowing central bankers discretion could do great harm if they are incompetent.

▪ Discretion allows the possibility of abuse.

▪ E.g., using monetary policy to affect election outcomes, causing fluctuations called “the political business cycle.”

▪ Central bankers who promise price stability may renege if a recession occurs.

▪ Time-inconsistency: the discrepancy between actual policy and announced policy

– الحجج ضد حرية التصرف: – .السماح للباحثين عن البنوك المركزية أن يضروا كثيراً إذا كانوا غير أكفاء

– .إمكانية سوء المعاملةحرية التصرف يسمح

– دورة األعمال "على سبيل المثال ، استخدام السياسة النقدية للتأثير في نتائج االنتخابات ، مما يسبب تقلبات تسمى ".السياسية

– .قد ينكمش محافظو البنوك المركزية الذين يعدون باستقرار األسعار إذا حدث ركود

– التناقض بين السياسة الفعلية والسياسة المعلنة: التناقض الزمني

3. Should Monetary Policy Be Made by Rule or Discretion?

Arguments for discretion:

▪ Discretion allows flexibility to react to unforeseen events.

▪ Political business cycles and time-inconsistency are theoretical possibilities but not that important in practice.

▪ It is difficult to specify rules precisely and to determine what the best rule would be.

• :الحجج للسلطة التقديرية

• .المرونة للرد على األحداث غير المتوقعةحرية التصرف يسمح

• .دورات األعمال السياسية والتناقض الزمني هي احتماالت نظرية ولكنها ليست مهمة في الممارسة

• .من الصعب تحديد القواعد بدقة وتحديد أفضل قاعدة

4. Should the Central Bank Aim for Zero Inflation? هل ينبغي للبنك المركزي أن يسعى إلى التخلص من التضخم؟

▪ Recall two of the Ten Principles of Economics from Chapter 1:

Prices rise when the govt prints too

much money.

Society faces a short-run tradeoff

between inflation and unemployment.

▪ How much inflation should the central bank accept? Is zero the right target?

• :اثنين من المبادئ العشر لالقتصاد من الفصل األولتذكر

• .ترتفع األسعار عندما تطبع الحكومة الكثير من المال

• .يواجه المجتمع مفاوضة قصيرة المدى بين التضخم والبطالة

• ما مقدار التضخم الذي ينبغي على البنك المركزي قبوله؟ هو صفر الهدف الصحيح؟

4. Should the Central Bank Aim for Zero Inflation?

Arguments for a zero inflation target:

▪ The costs of inflation (shoeleather, menu, etc.)

can be substantial even for low inflation.

▪ Achieving zero inflation would have temporary costs (higher unemployment)

but permanent benefits.

▪ And these costs could be reduced if the commitment to zero inflation is

credible

(reduces the expected inflation rate).

– :الحجج لتحقيق هدف التضخم صفر

– .كبيرة حتى بالنسبة للتضخم المنخفض( جلد األحذية ، والقائمة ، وما إلى ذلك)يمكن أن تكون تكاليف التضخم

– .ولكن فوائد دائمة( ارتفاع معدالت البطالة)إن تحقيق معدل تضخم صفري سيترتب عليه تكاليف مؤقتة

– (.يخفض معدل التضخم المتوقع)ويمكن خفض هذه التكاليف إذا كان االلتزام بالتضخم الصفري ذا مصداقية

4. Should the Central Bank Aim for Zero Inflation?

Arguments against a zero inflation target:

▪ The benefits of moving from moderate to zero inflation are small, but the costs are large:

▪ Estimates: must sacrifice 5% of a year’s GDP for each 1% reduction in inflation

▪ A disinflation would leave permanent scars:

▪ Investment falls, lowering the future capital stock

▪ Workers’ skills diminish while unemployed

▪ Some of inflation’s costs could be reduced through more widespread indexation.

• الحجج ضد هدف التضخم صفر: • :إن الفوائد المترتبة على االنتقال من التضخم المعتدل إلى الصفر تكون صغيرة ، لكن التكاليف كبيرة

• ٪ في التضخم1٪ من الناتج المحلي اإلجمالي للسنة لكل خفض بنسبة 5يجب التضحية بنسبة : التقديرات

• :سيؤدي ترك التضخم إلى ترك ندوب دائمة

• انخفاض االستثمار ، وخفض رأس المال المستقبلي

• تقلصت مهارات العمال أثناء البطالة

• .يمكن تخفيض بعض تكاليف التضخم من خالل مؤشر أكثر انتشاًرا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Another issue in the zero inflation debate

Suppose a structural change reduces the demand

for university administrators, lowering their

equilibrium real wage by 3%.

A. If the actual real wage paid to university

administrators remains constant, what would be

the consequences?

B. Would it be easier to achieve the 3% real wage

reduction if the inflation rate is 0% or if it is 4%?

Why?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

A. If the actual real wage paid to university administrators remains constant, what would be

the consequences?

Whenever the actual real wage exceeds the equilibrium real wage, there is a surplus of labor,

which represents wasted resources.

A fall in the wage would alleviate the surplus:

▪ it would encourage some administrators to switch

to university teaching or private sector employment

▪ it would increase the quantity of administrators

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

B. Would it be easier to achieve the 3% real wage reduction if the inflation rate is 0% or if it is 4%?

Why?

To restore labor market equilibrium under 0% inflation, administrators would have to accept a 3%

nominal wage cut.

Under 4% inflation, they would have to accept a

1% nominal wage increase.

The second scenario is more likely, as many

people suffer from “money illusion” and focus on nominal variables rather than real ones.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5. Should the Government Balance Its Budget? هل يجب على الحكومة موازنة ميزانيتها؟

Arguments for balancing the budget:

▪ Govt debt places a burden on future generations.

▪ Budget deficits crowd out investment, reducing growth and future living

standards.

▪ While deficits may be justified during recessions

or wars, the surging peacetime debt of recent decades is unsustainable and

detrimental.

• الحجج لموازنة الميزانية: • .يضع الدين الحكومي عبئا على األجيال القادمة

• .العجز في الميزانية يقضي على االستثمار ، ويقلل من النمو ومستويات المعيشة في المستقبل

• وبينما يمكن تبرير حاالت العجز خالل فترات الركود أو الحروب ، إال أن ارتفاع الديون في زمن السلم في العقود األخيرة غير مستدام ومضر

5. Should the Government Balance Its Budget?

Arguments against balancing the budget:

▪ The burden of the govt’s debt is exaggerated;

it’s only a tiny % of a person’s lifetime income.

▪ Cutting the deficit could do more harm than good:

▪ Cutting education would reduce human capital accumulation and future living standards

▪ Raising taxes reduces incentives to work and save

▪ Focusing on the deficit diverts attention from other programs that redistribute income across generations, such as Social Security.

▪ Debt/income ratio more relevant than debt itself

• الحجج ضد موازنة الميزانية: • .إن عبء ديون الحكومة مبالغ فيه ؛ فهو ال يمثل إال نسبة ضئيلة من دخل الشخص مدى الحياة

• :يمكن لخفض العجز أن يضر أكثر مما ينفع

• سيؤدي خفض التعليم إلى الحد من تراكم رأس المال البشري ومستويات المعيشة في المستقبل

• رفع الضرائب يقلل من الحوافز للعمل واالنقاذ

• يؤدي التركيز على العجز إلى تحويل االنتباه عن البرامج األخرى التي تعيد توزيع الدخل عبر األجيال ، مثل الضمان .االجتماعي

• نسبة الدين إلى الدخل أكثر مالءمة من الدين نفسه

6. Should the Tax Laws Be Reformed to Encourage Saving? هل يجب إصالح قوانين الضرائب؟

Arguments for tax reform to encourage saving:

▪ One of the Ten Principles of Economics:

A nation’s standard of living depends on its ability to produce g&s.

▪ Higher saving provides more funds for capital accumulation, which

increases productivity and living standards.

• الحجج لإلصالح الضريبي لتشجيع االدخار: • يعتمد مستوى المعيشة في الدولة على قدرتها على إنتاج السلع : أحد المبادئ العشرة لالقتصاد

والخدمات

• توفير أعلى يوفر المزيد من األموال لتراكم رأس المال ، مما يزيد من اإلنتاجية ومستويات .المعيشة

6. Should the Tax Laws Be Reformed to Encourage Saving?

Arguments for tax reform to encourage saving:

▪ Another of the Ten Principles of Economics:

People respond to incentives.

▪ The current U.S. tax system discourages saving:

▪ High marginal tax rates reduce return on saving

▪ Some saving is taxed twice (as corporate income and again as personal income)

▪ High tax rates on bequests (up to 55%!!!)

▪ Better: replace income tax with a consumption tax to increase the incentive to save

• :الحجج لإلصالح الضريبي لتشجيع االدخار

• .الناس يستجيبون للحوافز: من المبادئ األخرى العشره لالقتصاد

• :ال يشجع نظام الضرائب األمريكي الحالي على االدخار

• ارتفاع معدالت الضرائب الهامشية تقلل من العائد على االدخار • (كدخل للشركات ومرة أخرى كدخل شخصي)يتم فرض ضريبة على بعض االدخار مرتين

• !!!(٪ 55تصل إلى )معدالت ضريبة عالية على الوصايا

• استبدال ضريبة الدخل بضريبة االستهالك لزيادة الحافز للحف: األفضل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Switching to a consumption tax

▪ Suppose the income tax were replaced with a

consumption tax, and the tax rate was chosen

carefully to ensure that the average person’s tax burden remains unchanged.

▪ Who would benefit? Who would be worse off?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

▪ People with higher incomes save a bigger

percentage of their incomes, so would benefit

most from this change.

▪ People with low incomes use most or all of their

incomes for consumption and would be worse

off.

(This is why most consumption tax proposals

include exemptions for necessities, like

groceries, which comprise a larger share of the

budgets of low-income persons.)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6. Should the Tax Laws Be Reformed to Encourage Saving?

Arguments against tax reform to encourage saving:

▪ Such tax reform would mainly benefit the wealthy,

who need tax relief the least.

▪ Estimates of interest-rate elasticity of saving are low, so tax incentives may not increase

saving much.

▪ Reducing taxes on capital income may increase the govt’s budget deficit, negating the

benefits of higher private saving.

▪ Better: increase national saving directly by reducing the budget deficit.

• الحجج ضد اإلصالح الضريبي لتشجيع االدخار: • .مثل هذا اإلصالح الضريبي سوف يفيد األغنياء ، الذين يحتاجون إلى إعفاءات ضريبية على األقل

• .إن تقديرات مرونة معدل الفائدة لالدخار منخفضة ، لذا فإن الحوافز الضريبية قد ال تزيد من االدخار كثيًرا

• قد يؤدي تخفيض الضرائب على دخل رأس المال إلى زيادة العجز في ميزانية الحكومة ، مما يلغي فوائد ارتفاع المدخرات .الخاصة

• زيادة االدخار الوطني مباشرة عن طريق خفض العجز في الميزانية: أفضل

CONCLUSION

▪ Economics teaches us “there’s no such thing as a free lunch.” There are few easy answers and many unresolved questions.

▪ Crafting the best policy requires knowing the pros

and cons of every alternative.

▪ Being an informed voter requires the ability to

evaluate the candidates’ policy proposals.

▪ Knowing the principles of economics helps in

these endeavors.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Advocates of active policy argue that the economy is inherently

unstable and believe that policy can manage aggregate demand to help stabilize output and employment. Critics of active policy note

that policies act with long lags and can end up destabilizing the

economy rather than helping it. • يجادل المدافعون عن السياسة النشطة بأن االقتصاد غير مستقر بطبيعته ويعتقدون أن السياسة يمكنها إدارة

يشير منتقدو السياسة النشطة إلى أن السياسات تتصرف . الطلب الكلي للمساعدة في استقرار اإلنتاج والعمالة .مع الفترات الزمنية الطويلة ويمكن أن تؤدي في النهاية إلى زعزعة استقرار االقتصاد بدالً من مساعدته

• Advocates of monetary policy rules argue that discretionary policy can

suffer from incompetence, abuse, and time-inconsistency. Critics of rules

argue that the flexibility of discretion is important for responding to changing

economic circumstances.

• يجادل المدافعون عن قواعد السياسة النقدية بأن السياسة التقديرية يمكن أن تعاني من عدم الكفاءة وسوء يجادل منتقدو القواعد بأن المرونة في التقديرات مهمة للرد على الظروف . المعاملة والتناقض الزمني

االقتصادية المتغيرة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Advocates of fighting recessions with spending hikes rather than tax

cuts argue that spending has a larger effect on aggregate demand, since households may not spend all of a tax cut. Advocates of

fighting recessions with tax cuts argue that hastily implemented

spending increases may be wasteful, and that tax cuts have beneficial incentive effects on both demand and supply.

• يجادل المدافعون عن مكافحة الركود مع زيادة اإلنفاق بدالً من التخفيضات الضريبية بأن اإلنفاق

يجادل . له تأثير أكبر على الطلب الكلي ، حيث أن األسر قد ال تنفق كل التخفيضات الضريبية المدافعون عن محاربة الركود مع التخفيضات الضريبية بأن الزيادات في اإلنفاق التي تنفذ على عجل قد تكون هدًرا ، وأن التخفيضات الضريبية لها آثار حوافز مفيدة على كل من الطلب .والعرض

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Advocates of zero inflation argue that inflation has many costs and

no benefits. The costs of achieving zero inflation are temporary, while the benefits are permanent. Critics claim that the costs of low

inflation are small, whereas the recession necessary to reduce

inflation is quite costly. • إن تكاليف تحقيق . يجادل المدافعون عن التضخم الصفري بأن التضخم له العديد من التكاليف وليس له فوائد

يزعم المنتقدون أن تكاليف التضخم . التضخم الصفري هي تكاليف مؤقتة ، في حين أن الفوائد دائمة .المنخفض صغيرة ، في حين أن الركود الالزم لخفض التضخم مكلف للغاية

• Advocates of balancing the budget note that deficits burden future

generations by raising their taxes and lowering their incomes. Critics argue

that the deficit is only one part of fiscal policy and should be considered in a

broader context.

• المدافعون عن موازنة الميزانية يشيرون إلى أن العجز يثقل أجيال المستقبل من خالل زيادة الضرائب بأن العجز هو جزء واحد فقط من السياسة المالية ويجب النظر إليه في سياق يؤيد المنتقدون . وخفض دخلهم

.أوسع

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Advocates of reforming the tax laws to encourage saving note that

current tax laws discourage saving. Higher saving would increase investment, productivity growth, and future living standards.

Critics argue that such reforms would mainly benefit the wealthy,

and that such changes may have only a small effect on saving. They feel that reducing the budget deficit would be a more effective

and more equitable way to increase national saving. • المدافعون عن إصالح قوانين الضرائب لتشجيع االدخار علما أن قوانين الضرائب الحالية تثني

زيادة االدخار من شأنه أن يزيد االستثمار ونمو اإلنتاجية ومستويات المعيشة في . عن االدخار يجادل المنتقدون بأن مثل هذه اإلصالحات ستفيد األغنياء بشكل أساسي ، وأن مثل هذه . المستقبل

فهم يشعرون أن تخفيض عجز الميزانية . التغييرات قد ال يكون لها سوى تأثير بسيط على االدخار .سيكون وسيلة أكثر فعالية وأكثر إنصافا لزيادة االدخار الوطني

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Thinking Like an

Economist Premium

PowerPoint

Slides by

Ron Cronovich

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What are economists’ two roles? How do they differ?

• What are models? How do economists use them?

• What are the elements of the Circular-Flow Diagram?

What concepts does the diagram illustrate?

• How is the Production Possibilities Frontier related

to opportunity cost? What other concepts does it

illustrate?

• What is the difference between microeconomics and

macroeconomics? Between positive and normative?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Economist as Scientist كعالمالخبير االقتصادي

▪ Economists play two roles:

1. Scientists: try to explain the world

2. Policy advisors: try to improve it

▪ In the first, economists employ the

scientific method,

the dispassionate development and testing of theories about how

the world works.

▪ :يلعب االقتصاديون دورين

▪ حاول أن تشرح العالم: العلماء. 1

▪ حاول تحسينه: مستشارو السياسة. 2

▪ في المقام األول ، يستخدم االقتصاديون المنهج العلمي ، وتنمية واختبار النظريات حول كيفية عمل العالم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Assumptions & Models االفتراضات والنماذج

▪ Assumptions simplify the complex world,

make it easier to understand.

▪ Example: To study international trade,

assume two countries and two goods.

Unrealistic, but simple to learn and

gives useful insights about the real world.

.االفتراضات تبسط العالم المعقد ، وتسهل فهمه

.لدراسة التجارة الدولية ، افترض دولتين وسلعتين: مثال

غير واقعية ، ولكنها بسيطة للتعلم وتعطي رؤى مفيدة حول العالم الحقيقي

▪ Model: a highly simplified representation of a more complicated reality.

Economists use models to study economic issues.

▪ .يستخدم االقتصاديون نماذج لدراسة القضايا االقتصادية. تمثيل مبسط للغاية لواقع أكثر تعقيًدا: النموذج

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

النماذج المألوفةبعض

A road map

خارطة الطريق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

A model of human

anatomy from high

school biology class نموذج من التشريح البشري من فئة البيولوجيا في المدرسة الثانوية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

A model airplane

نموذج الطائره

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Some Familiar Models

The model teeth at the

dentist’s office

نموذج األسنان في مكتب طبيب األسنان

Don’t forget to floss!

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Our First Model:

The Circular-Flow Diagram مخطط التدفق الدائري: نموذجنا األول

▪ The Circular-Flow Diagram: a visual model of the economy,

shows how dollars flow through markets among households and

firms

▪ نموذج مرئي لالقتصاد ، يبين كيف تتدفق الدوالرات عبر األسواق بين األسر : الدائريالتدفق مخطط والشركات

▪ Two types of “actors”: نوعان من الجهات الفاعله ▪ Households األسر ▪ firms الشركات

▪ Two markets: اثنين من األسواق:

▪ the market for goods and services سوق السلع والخدمات

▪ the market for “factors of production” سوق عموال اإلنتاج

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Factors of Production عوامل اإلنتاج

▪ Factors of production: the resources the economy

uses to produce goods & services, including

▪ labor

▪ land

▪ capital (buildings & machines used in production)

▪ الموارد التي يستخدمها االقتصاد إلنتاج السلع والخدمات ، : عوامل اإلنتاج بما في ذلك

▪ العمال ▪ األرض

▪ (المباني واآلالت المستخدمة في اإلنتاج)رأس المال

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FIGURE 1: The Circular-Flow Diagram

Households:

▪ Own the factors of production,

sell/rent them to firms for income

▪ Buy and consume goods & services

▪ :األسر

▪ إيجارها للشركات للدخل/ بيعها تملك عوامل اإلنتاج ،

▪ واستهالك السلع والخدماتشراء

Households Firms

Firms:

▪ Buy/hire factors of production,

use them to produce goods and services

▪ Sell goods & services

▪ :شركات

▪ استئجار عوامل اإلنتاج ، واستخدامها إلنتاج السلع / شراء والخدمات

▪ بيع السلع والخدمات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FIGURE 1: The Circular-Flow Diagram

Markets for Factors of

Production

Households Firms

Income Wages, rent, profit

Factors of production

Labor, land, capital

Spending

G & S bought

G & S sold

Revenue Markets for Goods &

Services

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Our Second Model:

The Production Possibilities Frontier حدود إمكانيات اإلنتاج

▪ The Production Possibilities Frontier (PPF):

a graph that shows the combinations of two goods the economy can

possibly produce given the available resources and the available technology

▪

▪ Example:

▪ Two goods: computers and wheat

▪ One resource: labor (measured in hours)

▪ Economy has 50,000 labor hours per month available for

production. ▪ :مثال

▪ أجهزة الكمبيوتر والقمح: سلعتان

▪ (يقاس بالساعات)العمل : مورد واحد

▪ ساعة عمل شهريا المتاحة لإلنتاج 50،000االقتصاد لديها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PPF Example ▪ Producing one computer requires 100 hours labor.

▪ Producing one ton of wheat requires 10 hours labor.

5,000 0

4,000 100

2,500 250

1,000 400

50,000 0

40,000 10,000

25,000 25,000

10,000 40,000

0 500 0 50,000

Wheat Computers Wheat Computers

Production Employment of

labor hours

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Point

graph

Production

Com-

puters Wheat

A 500 0

B 400 1,000

C 250 2,500

D 100 4,000

E 0 5,000 A

PPF Example

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Points off the PPF

A. On the graph, find the point that represents

(100 computers, 3000 tons of wheat), label it F.

Would it be possible for the economy to produce

this combination of the two goods?

Why or why not?

B. Next, find the point that represents

(300 computers, 3500 tons of wheat), label it G.

Would it be possible for the economy to produce

this combination of the two goods?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

▪ Point F:

100 computers,

3000 tons wheat

▪ Point F requires

40,000 hours

of labor.

Possible but

not efficient:

could get more

of either good

w/o sacrificing

any of the other.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

▪ Point G:

300 computers,

3500 tons wheat

▪ Point G requires

65,000 hours

of labor.

Not possible

because

economy

only has

50,000 hours.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF: What We Know So Far

Points on the PPF (like A – E)

▪ possible

▪ efficient: all resources are fully utilized

Points under the PPF (like F)

▪ possible

▪ not efficient: some resources underutilized

(e.g., workers unemployed, factories idle)

Points above the PPF (like G)

▪ not possible

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF and Opportunity Cost

▪ Recall: The opportunity cost of an item is what must be given up

to obtain that item.

▪ .ذلك العنصرعلى التخلي عنه للحصول يجب ألحد العناصر هي ما تكلفة الفرصة البديلة : تذكير

▪ Moving along a PPF involves shifting resources (e.g., labor) from the

production of one good to the other.

▪ من إنتاج ( على سبيل المثال ، العمالة)التحرك على طول بي بي اف ينطوي على نقل الموارد .واحد جيد إلى اآلخر

▪ Society faces a tradeoff: Getting more of one good requires

sacrificing some of the other.

▪ .الحصول على المزيد من الخير يتطلب التضحية ببعض اآلخر: المجتمع يواجه مقايضة

▪ The slope of the PPF tells you the opportunity cost of one good in terms of

the other.

▪ .منحدر بي بي اف يخبرك تكلفة فرصة واحدة جيدة من ناحية أخرى

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF and Opportunity Cost

The slope of a line

equals the

“rise over the run,” the amount the line rises

when you move to the

right by one unit. االرتفاع فوق "يساوي ميل خط ما

، وهو المقدار الذي يرتفع به " المدى الخط عند االنتقال إلى اليمين بواسطة

.وحدة واحدة

–1000

100 slope = = –10

Here, the opportunity

cost of a computer is

10 tons of wheat. هنا ، تكلفة الفرصة البديلة

طن من القمح 10للكمبيوتر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

PPF and Opportunity Cost

In which country is the opportunity cost of cloth lower?

FRANCE ENGLAND

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

England, because its PPF is not as steep as France’s. FRANCE ENGLAND

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Economic Growth and the PPF

With additional resources

or an improvement in

technology,

the economy can

produce more cmputers,

more wheat,

or any combination in

between.

باستخدام موارد إضافية أو تحسين في التكنولوجيا ، يمكن لالقتصاد إنتاج المزيد من أجهزة الكمبيوتر ، أو المزيد من القمح ، أو أي مزيج بينهما

Economic

growth shifts

the PPF

outward.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Shape of the PPF

▪ The PPF could be a straight line or bow-shaped

▪ Depends on what happens to opportunity cost

as economy shifts resources from one industry

to the other.

▪ يمكن أن يكون بي بي اف خط مستقيم أو على شكل قوس

▪ يعتمد على ما يحدث لتكلفة الفرصة البديلة عندما يحول االقتصاد الموارد من صناعة إلى أخرى

▪ If opp. cost remains constant, PPF is a straight line.

(In the previous example, opp. cost of a computer was always 10 tons of

wheat.)

.مستقيمتكلفة الفرصة ثابتة ، فإن بي بي اف هي خط اذا بقيت

(.أطنان من القمح 10في المثال السابق ، كانت تكلفة تشغيل الكمبيوتر )

▪ If opp. cost of a good rises as the economy produces more of the good,

PPF is bow-shaped.

▪ إذا كانت تكلفة الفرصة البديلة لسلعة ما ترتفع بينما االقتصاد ينتج اكثر من سلعه، فإن بي بي اف تكون على شكل قوس

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

Mountain

Bikes

B e

e r As the economy shifts

resources

from beer to mountain bikes:

▪ PPF becomes steeper

▪ opp. cost of mountain

bikes increases

▪ بينما ينقل االقتصاد الموارد من :البيرة إلى الدراجات الجبلية

▪ بي بي اف تصبح أكثر حدة

▪ تكلفة الدراجات الجبلية يزيد. مقابل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

At point A,

most workers are

producing beer,

even those who

are better suited

to building bikes.

So, do not have to

give up much beer

to get more bikes.

في النقطة اي ، معظم العمال ينتجون البيرة ، حتى أولئك الذين هم أكثر مالءمة

.لبناء الدراجات

لذلك ، ال تضطر إلى التخلي عن الكثير من البيرة للحصول على المزيد من

.الدراجات

Mountain

Bikes

B e

e r At A, opp. cost of

mtn bikes is low.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

At B, most workers are

producing bikes.

The few left in beer are the

best brewers.

Producing more bikes would

require shifting some of the

best brewers away from beer

production,

causing a big drop in beer

output.

. في بي ، معظم العمال ينتجون الدراجات القليلة المتبقية في البيرة هي أفضل مصانع

.البيرة

Mountain

Bikes

B e

e r

At B, opp. cost

of mtn bikes

is high.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why the PPF Might Be Bow-Shaped

▪ So, PPF is bow-shaped when different workers have different skills,

different opportunity costs of producing one good in terms of the

other.

▪ The PPF would also be bow-shaped when there is some other

resource, or mix of resources with varying opportunity costs

(E.g., different types of land suited for

different uses).

(.على سبيل المثال ، أنواع مختلفة من األراضي مناسبة لالستخدامات المختلفة)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The PPF: A Summary

▪ The PPF shows all combinations of two goods that an economy can

▪ The PPF illustrates the concepts of tradeoff and opportunity cost,

efficiency and inefficiency, unemployment, and economic growth.

▪ .يوضح بي بي اف مفاهيم المقايضة وتكلفة الفرص ، والكفاءة ، وعدم الكفاءة ، والبطالة ، والنمو االقتصادي

▪ A bow-shaped PPF illustrates the concept of increasing opportunity

cost.

▪ .يوضح الشكل بي بي اف مفهوم زيادة تكلفة الفرصة البديلة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Microeconomics and Macroeconomicsمهم

▪ Microeconomics is the study of how households and

▪ Macroeconomics is the study of economy-wide

phenomena, including inflation, unemployment, and

economic growth.

▪ .االقتصاد الكلي هو دراسة الظواهر االقتصادية الشاملة ، بما في ذلك التضخم والبطالة والنمو االقتصادي

▪ These two branches of economics are closely intertwined, yet

distinct—they address different questions.

▪ هذان الفرعان من فروع االقتصاد مترابطان بشكل وثيق ، ومع ذلك يتميزان بخصائص مختلفة

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Economist as Policy Advisor ر االقتصادي كمستشا السياسه

▪ As scientists, economists make

positive statements, which attempt to describe the world as it is.

▪ As policy advisors, economists make

which attempt to prescribe how the world should be.

▪ Positive statements can be confirmed or refuted, normative statements cannot.

▪ .البيانات المعيارية ، التي تحاول وصف كيف يجب أن يكون العالم

▪ يمكن تأكيد أو دحض البيانات اإليجابية ، وال يمكن للبيانات المعيارية

▪ Govt employs many economists for policy advice. E.g., the U.S. President has

a Council of Economic Advisors, which the author of this textbook chaired from

2003 to 2005.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Identifying positive vs. normative مقابل المعياريةحدد اإليجابية

Which of these statements are “positive” and which are “normative”? How can you tell the difference?

؟؟ كيف يمكنك معرفة الفرق"معيارية"وأيها " إيجابية"أي من هذه العبارات

A Prices rise when the government increases the quantity of money.

a. .ترتفع األسعار عندما تزيد الحكومة من كمية المال

B The government should print less money.

b. أقليجب على الحكومة طباعة أموال

C A tax cut is needed to stimulate the economy.

c. .هناك حاجة إلى خفض الضرائب لتحفيز االقتصاد

d. An increase in the price of burritos will cause an increase in consumer

demand for music downloads. الزيادة في سعر بوريتوس سيؤدي إلى زيادة في الطلب االستهالكي .على تنزيالت الموسيقى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

a. Prices rise when the government increases the

quantity of money.

Positive – describes a relationship, could use data to confirm or

refute.

.الدحضيصف العالقة ، يمكن أن يستخدم البيانات للتأكيد أو -إيجابي

b. The government should print less money.

Normative – this is a value judgment, cannot be confirmed or

refuted. الدحضأو يمكن التأكيد وهذا هو حكم القيمة ، ال -المعيارية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Answers

c. A tax cut is needed to stimulate the economy.

Normative – another value judgment. حكم قيمه أخرى

d. An increase in the price of burritos will cause an

increase in consumer demand for music

downloads.

Positive – describes a relationship.

Note that a statement need not be true to be positive.

.الحظ أنه ال يجب أن يكون البيان صحيًحا ليكون إيجابيًا. يصف العالقة -اإليجابي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Why Economists Disagree

▪ Economists often give conflicting policy advice.

▪ They sometimes disagree about the validity of alternative positive

theories about the world.

▪ They may have different values and, therefore, different normative

views about what policy should try to accomplish.

▪ Yet, there are many propositions about which most economists

agree.

▪ .غالباً ما يقدم االقتصاديون نصائح سياسية متضاربة

▪ .في بعض األحيان يختلفون حول صحة النظريات اإليجابية البديلة حول العالم

▪ قد يكون لديهم قيم مختلفة ، وبالتالي ، وجهات نظر معيارية مختلفة حول ما يجب أن تحاول .السياسة تحقيقه

▪ ومع ذلك ، هناك العديد من المقترحات التي يتفق عليها معظم االقتصاديين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Propositions about Which Most Economists Agree (and % who agree)

▪ A ceiling on rents reduces the quantity and quality

of housing available. (93%)

▪ Tariffs and import quotas usually reduce general

economic welfare. (93%)

▪ The United States should not restrict employers

from outsourcing work to foreign countries. (90%)

▪ The United States should eliminate agriculture

subsidies. (85%)

continued…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Propositions about Which Most Economists Agree (and % agreeing)

▪ The gap between Social Security funds and

expenditures will become unsustainably large

within the next fifty years if current policies remain

unchanged. (85%)

▪ A large federal budget deficit has an adverse effect

on the economy. (83%)

▪ A minimum wage increases unemployment among

young and unskilled workers. (79%)

▪ Effluent taxes and marketable pollution permits

represent a better approach to pollution control

than imposition of pollution ceilings. (78%)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

FYI: Who Studies Economics?

▪ Ronald Reagan, President of the United States

▪ Barbara Boxer, U.S. Senator

▪ Sandra Day-O’Connor, Former Supreme Court Justice

▪ Anthony Zinni, Former General, U.S. Marine Corps

▪ Kofi Annan, Former Secretary General, United Nations

▪ Meg Witman, Chief Executive Officer, eBay

▪ Steve Ballmer, Chief Executive Officer, Microsoft

▪ Arnold Schwarzenegger, Former Gov. of California, Actor

▪ Ben Stein, Political Speechwriter, Actor, Game Show Host

▪ Mick Jagger, Singer for the Rolling Stones

▪ John Elway, NFL Quarterback

▪ Tiger Woods, Golfer

▪ Diane von Furstenburg, Fashion Designer

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• As scientists, economists try to explain the world using models with

appropriate assumptions.

• مناسبةكعلماء ، يحاول االقتصاديون شرح العالم باستخدام نماذج مع افتراضات

• Two simple models are the Circular-Flow Diagram and the

Production Possibilities Frontier.

• اإلنتاجنموذجان بسيطان هما مخطط التدفق الدائري وحدود

• Microeconomics studies the behavior of consumers and firms, and their

interactions in markets. Macroeconomics studies the economy as a whole.

• االقتصاد الكلي يدرس . يدرس االقتصاد الجزئي سلوك المستهلكين والشركات وتفاعالتهم في األسواق .االقتصاد ككل

• As policy advisers, economists offer advice on how to improve the

world. كمستشارين للسياسة ، يقدم االقتصاديون المشورة حول كيفية تحسين العالم.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Interdependence and the

Gains from Trade Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• Why do people—and nations—choose to be

economically interdependent?

• How can trade make everyone better off?

• What is absolute advantage?

What is comparative advantage?

How are these concepts similar?

How are they different?

Interdependence الترابط

Every day you rely on

many people from around

the world, most of whom

you’ve never met, to provide

you with the goods

and services you enjoy.

كل يوم تعتمد على العديد من األشخاص من جميع أنحاء العالم ، ومعظمهم لم

تلتق بهم مطلًقا ، لتزويدك بالسلع .والخدمات التي تستمتع بها

coffee from

Kenya

dress shirt

from China

cell phone

from Taiwan

hair gel from

Cleveland, OH

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Interdependence

▪ One of the Ten Principles from Chapter 1:

Trade can make everyone better off.

▪ We now learn why people—and nations— choose to be interdependent,

and how they can gain from trade.

Our Example

▪ Two countries: the U.S. and Japan

▪ Two goods: computers and wheat

▪ One resource: labor, measured in hours

▪ We will look at how much of both goods

each country produces and consumes

▪ if the country chooses to be self-sufficient

▪ if it trades with the other country

▪ الواليات المتحدة واليابان: دولتان

▪ أجهزة الكمبيوتر والقمح: سلعتان

▪ العمل ، يقاس في ساعات: مورد واحد

▪ سوف ننظر إلى كمية البضائع التي تنتجها وتستهلكها كل دولة

▪ إذا اختار البلد أن يكون مكتفي ذاتيا ▪ إذا كان يتاجر مع البلد اآلخر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Production Possibilities in the U.S. إمكانات اإلنتاج في الواليات المتحدة ▪ The U.S. has 50,000 hours of labor

available for production, per month.

▪ Producing one computer

requires 100 hours of labor.

▪ Producing one ton of wheat

requires 10 hours of labor.

▪ .ساعة عمل متاحة لإلنتاج ، في الشهر 50،000لدى الواليات المتحدة

▪ .ساعة من العمل 100يتطلب إنتاج جهاز كمبيوتر واحد

▪ .ساعات من العمل 10يتطلب إنتاج طن واحد من القمح

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat

(tons)

The U.S. PPF

The U.S. has enough labor to produce

500 computers,

or 5000 tons of wheat,

or any combination along the PPF.

لدى الواليات المتحدة ما يكفي من العمالة إلنتاج جهاز كمبيوتر 500

طن من القمح 5000أو

أو أي مجموعة على طول بي بي اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat

(tons)

The U.S. Without Trade

Suppose the U.S. uses half its labor to produce

each of the two goods.

Then it will produce and consume

250 computers and

2500 tons of wheat. .لنفترض أن الواليات المتحدة تستخدم نصف أعمالها إلنتاج كل سلعتين

طن من القمح 2500جهاز كمبيوتر و 250ثم ستنتج وتستهلك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Derive Japan’s PPF

Use the following information to draw Japan’s PPF.

▪ Japan has 30,000 hours of labor available for

production, per month.

▪ Producing one computer requires 125 hours of

labor.

▪ Producing one ton of wheat requires 25 hours

of labor.

Your graph should measure computers on the

horizontal axis.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Computers

Wheat

(tons)

2,000

1,000

200 0

100 300

Japan’s PPF

Japan has enough labor to produce

240 computers,

or 1200 tons of wheat, or any combination along the

PPF. جهاز كمبيوتر 240اليابان لديها ما يكفي من العمالة إلنتاج

، طن من القمح أو أي مزيج على طول بي بي 1200أو

.اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan Without Trade

Computers

Wheat

(tons)

2,000

1,000

200 0

100 300

Suppose Japan uses half its labor to produce each

good.

Then it will produce and consume120 computers

and 600 tons of wheat. ثم ستنتج . لنفترض أن اليابان تستخدم نصف أعمالها إلنتاج كل سلعة

طن من القمح 600جهاز كمبيوتر و 120وتستهلك

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumption With and Without Trade

▪ Without trade,

▪ U.S. consumers get 250 computers

and 2500 tons wheat.

▪ Japanese consumers get 120 computers

and 600 tons wheat.

▪ We will compare consumption without trade to consumption with trade.

▪ First, we need to see how much of each good is produced and traded by the

two countries.

▪ بدون التجارة ،

▪ .طنًا من القمح 2500جهاز كمبيوتر و 250يصل مستهلكو الواليات المتحدة إلى

▪ .طن قمح 600جهاز كمبيوتر و 120يحصل المستهلكون اليابانيون على

▪ .سنقارن االستهالك بدون التجارة باالستهالك مع التجارة

▪ .أوالً ، نحتاج إلى معرفة كمية السلع التي يتم إنتاجها وتداولها من قبل البلدين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Production under trade

1. Suppose the U.S. produces 3400 tons of wheat. How many computers

would the U.S. be able to produce with its remaining labor? Draw the point

representing this combination of computers and wheat on the U.S. PPF.

2. Suppose Japan produces 240 computers.

How many tons of wheat would Japan be able to produce with its

remaining labor? Draw this point on Japan’s PPF.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat

(tons)

U.S. Production With Trade

Producing 3400 tons of wheat requires

34,000 labor hours.

The remaining 16,000 labor hours

are used to produce 160

computers.

ساعة 34000طن من القمح يتطلب 3400إنتاج .عمل

16000وتُستخدم ساعات العمل المتبقية البالغة .جهاز كمبيوتر 160ساعة إلنتاج

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan’s Production With Trade

Producing 240 computers requires all

of Japan’s 30,000 labor hours.

Computers

Wheat

(tons)

2,000

1,000

200 0

100 300

So, Japan would produce

0 tons of wheat.

حاسوبًا جميع ساعات العمل في 240يتطلب إنتاج .ساعة 30،000اليابان التي تصل إلى

.طن من القمح 0لذلك ، ستنتج اليابان

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Exports & Imports

▪ Exports:

goods produced domestically and sold abroad ▪ الخارجالسلع المنتجة محليا وتباع في : الصادرات

To export means to sell domestically produced goods

abroad.

.لتصدير وسائل بيع السلع المنتجة محليا في الخارج

▪ Imports:

goods produced abroad and sold domestically

▪ محلياً السلع المنتجة في الخارج وتباع : الواردات

To import means to purchase goods produced in other

countries. الستيراد وسائل لشراء السلع المنتجة في بلدان أخرى.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Consumption under trade

Suppose the U.S. exports 700 tons of wheat to Japan, and imports 110

computers from Japan.

(So, Japan imports 700 tons wheat and exports 110 computers.)

▪ How much of each good is consumed in the U.S.? Plot this combination

on the U.S. PPF.

▪ How much of each good is consumed in Japan? Plot this combination on

Japan’s PPF.

▪ أجهزة كمبيوتر من 110طن من القمح إلى اليابان ، وتستورد 700لنفرض أن الواليات المتحدة تصدر .اليابان

▪ (.أجهزة كمبيوتر 110طن من القمح وتصدير 700لذلك ، تستورد اليابان )

▪ ما مقدار ما تستهلكه كل سلعة في الواليات المتحدة؟ ارسم هذه المجموعة على الواليات المتحدة بي بي .اف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4,000

100

5,000

2,000

1,000

3,000

500 200 300 400 0

Computers

Wheat

(tons)

U.S. Consumption With Trade

2700 270 = amount

consumed

0 110 + imported

700 0 – exported

3400 160 produced

wheat computers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Japan’s Consumption With Trade

Computers

Wheat

(tons)

2,000

1,000

200 0

100 300

700 130 = amount

consumed

700 0 + imported

0 110 – exported

0 240 produced

wheat computers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Trade Makes Both Countries Better Off

200 2700 2500 wheat

20 270 250 computers

gains from

trade

consumption

with trade

consumption

without trade

U.S.

100 700 600 wheat

10 130 120 computers

gains from

trade

consumption

with trade

consumption

without trade

Japan

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Where Do These Gains Come From?

▪ Absolute advantage: the ability to produce a good

using fewer inputs than another producer ▪ اآلخرالقدرة على إنتاج منتج جيد باستخدام مدخالت أقل من المنتج : الميزة المطلقة

▪ The U.S. has an absolute advantage in wheat: producing a ton of wheat

uses 10 labor hours in the U.S. vs. 25 in Japan.

▪ If each country has an absolute advantage in one good and

specializes in that good, then both countries can gain from trade.

▪ فيمكن لكال البلدين االستفادة من هذي السعه ، إذا كان لكل بلد ميزة مطلقة في سلعة واحدة ومتخصص في .التجارة

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Where Do These Gains Come From?

▪ Which country has an absolute advantage in computers?

▪ Producing one computer requires

125 labor hours in Japan,

but only 100 in the U.S.

▪ The U.S. has an absolute advantage in both goods!

▪ الذي لديه ميزة مطلقة في أجهزة الكمبيوتر؟أي البلد

▪ .في الواليات المتحدة 100ساعة عمل في اليابان ، ولكن فقط 125يتطلب إنتاج جهاز كمبيوتر واحد

▪ !تتمتع الواليات المتحدة بميزة مطلقة في البضائع

So why does Japan specialize in computers? Why do both

countries gain from trade?

إذن لماذا تتخصص اليابان في أجهزة الكمبيوتر؟ لماذا يكسب كال البلدين من التجارة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two Measures of the Cost of a Good قياسات التكلفة الجيدةاثنين من

▪ Two countries can gain from trade when each specializes in the

good it produces at lowest cost. ▪ .يمكن لبلدين أن يستفيدا من التجارة عندما يتخصص كل منهما في السلعة التي ينتجها بأقل تكلفة

▪ Absolute advantage measures the cost of a good in terms of the

inputs required to produce it.

▪ .تقوم الميزة المطلقة بقياس تكلفة السلعة من حيث المدخالت الالزمة إلنتاجها

▪ Recall:

Another measure of cost is opportunity cost.

▪ In our example, the opportunity cost of a computer is the amount of wheat

that could be produced using the labor needed to produce one computer.

▪ .مقياس آخر للتكلفة هو تكلفة الفرصة: تذكير

▪ في مثالنا ، فإن تكلفة الفرصة البديلة للكمبيوتر هي كمية القمح التي يمكن إنتاجها باستخدام اليد العاملة

الالزمة إلنتاج حاسوب واحد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Opportunity Cost and Comparative Advantage تكلفة الفرصة والمزايا النسبية

▪ Comparative advantage: the ability to produce

a good at a lower opportunity cost than another producer ▪ آخرفرصة أقل من منتج سلعه بتكلفة القدرة على إنتاج : الميزة النسبية

▪ Which country has the comparative advantage in

computers?

▪ الكمبيوتر؟يتمتع بميزة نسبية في أجهزة أي البلدالذي

▪ To answer this, must determine the opportunity cost of a

computer in each country.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Opportunity Cost and

Comparative Advantage

▪ The opportunity cost of a computer is

▪ 10 tons of wheat in the U.S., because producing one computer requires

100 labor hours, which instead could produce 10 tons of wheat.

▪ 5 tons of wheat in Japan, because producing one computer requires

125 labor hours, which instead could produce 5 tons of wheat.

▪ تكلفة الفرصة البديلة للكمبيوتر

▪ So, Japan has a comparative advantage in computers. Lesson:

Absolute advantage is not necessary for comparative advantage!

▪ !الميزة المطلقة ليست ضرورية للميزة النسبية: الدرس. لذلك ، تتمتع اليابان بميزة نسبية في أجهزة الكمبيوتر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Comparative Advantage and Trade الميزة النسبية والتجارة

▪ Gains from trade arise from comparative advantage (differences in

opportunity costs). االختالفات في تكاليف )تنشأ المكاسب من التجارة من الميزة النسبية (.الفرصة البديلة

▪ When each country specializes in the good(s) in which it has a

comparative advantage, total production in all countries is higher,

the world’s “economic pie” is bigger, and all countries can gain from

trade.

▪ The same applies to individual producers (like the farmer and the

rancher) specializing in different goods and trading with each other.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Absolute and comparative advantage Argentina and Brazil each have 10,000 hours of labor per month.

In Argentina,

▪ producing one pound coffee requires 2 hours

▪ producing one bottle wine requires 4 hours ▪ .ساعة عمل في الشهر 10000لدى كل من األرجنتين والبرازيل

▪ في األرجنتين، ▪ ساعة 2إنتاج القهوة باوند واحد يتطلب

▪ ساعات 4إنتاج زجاجة واحدة النبيذ يتطلب

In Brazil,

▪ producing one pound coffee requires 1 hour

▪ producing one bottle wine requires 5 hours

Which country has an absolute advantage in the production of coffee? Which country has a comparative advantage in the production of wine?

في البرازيل،

باوند ساعة واحدةقهوه واحد يتطلب إنتاج

ساعات 5إنتاج زجاجة واحدة من النبيذ يتطلب

؟النبيذلديه ميزة مطلقة في إنتاج القهوة؟ البلد الذي لديه ميزة نسبية في إنتاج أي البلد الذي

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 4

Answers Brazil has an absolute advantage in coffee:

▪ Producing a pound of coffee requires only one labor-hour in Brazil, but

two in Argentina.

▪ :البرازيل لديها ميزة مطلقة في القهوة

▪ إن إنتاج رطل من القهوة يتطلب ساعة واحدة فقط من العمل في البرازيل ، ولكن اثنين في األرجنتين

Argentina has a comparative advantage in wine:

▪ Argentina’s opp. cost of wine is two pounds of coffee, because the four labor- hours required

to produce a bottle of wine could instead produce two pounds of coffee.

▪ Brazil’s opp. cost of wine is five pounds of coffee.

▪ :تتمتع األرجنتين بميزة نسبية في النبيذ

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Unanswered Questions…

▪ We made a lot of assumptions about the quantities

of each good that each country produces, trades,

and consumes, and the price at which the countries

trade wheat for computers.

▪ In the real world, these quantities and prices would

be determined by the preferences of consumers

and the technology and resources in both countries.

▪ We will begin to study this in the next chapter.

▪ For now, though, our goal was merely to see how

trade can make everyone better off.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Interdependence and trade allow everyone to enjoy a greater

quantity and variety of goods & services. • .الترابط والتجارة يتيحان للجميع التمتع بكمية وتنوع أكبر من السلع والخدمات

• Comparative advantage means being able to produce a good at a

lower opportunity cost. Absolute advantage means being able to

produce a good with fewer inputs.

• When people—or countries—specialize in the goods in which they

have a comparative advantage, the economic “pie” grows and trade can make everyone better off.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market Forces of

Supply and Demand Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What factors affect buyers’ demand for goods?

• What factors affect sellers’ supply of goods? • How do supply and demand determine the price

of a good and the quantity sold?

• How do changes in the factors that affect

demand or supply affect the market price and

quantity of a good?

• How do markets allocate resources?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Markets and Competitionمهم

▪ A market is a group of buyers and sellers of a particular product. ▪ .السوق هو مجموعة من المشترين والبائعين لمنتج معين

▪ A competitive market is one with many buyers and sellers, each has a negligible effect on price.

▪ السوق التنافسية هي واحدة مع العديد من المشترين والبائعين ، كل واحد له تأثير ضئيل على .السعر

▪ In a perfectly competitive market:

▪ All goods exactly the same

▪ Buyers & sellers so numerous that no one can affect market price— each is a “price taker”

▪ :في سوق تنافسية تماًما

▪ جميع السلع بالضبط نفس الشيء

▪ فكل واحد منهم هو -المشترون والبائعون كثيرون لدرجة أنه ال يمكن ألحد أن يؤثر على سعر السوق "متخذ السعر »

▪ In this chapter, we assume markets are perfectly competitive.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand

▪ The quantity demanded of any good is the amount of the good that

buyers are willing and able to purchase. ▪ إن الكمية المطلوبة من أي سلعة هي كمية السلعة التي يرغب المشترون في شرائها وقادرين على

.شرائها

▪ Law of demand: the claim that the quantity demanded of a good

falls when the price of the good rises, other things equal

▪ واألشياء يرتفع سعر السلعة ، تنخفض عندما االدعاء بأن الكمية المطلوبة من سلعة : قانون الطلب األخرى متساوية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Demand Schedule

▪ Demand schedule:

a table that shows the relationship between the price of a good and the

quantity demanded

▪ جدول يوضح العالقة بين سعر السلعة : جدول الطلب والكمية المطلوبة

▪ Example:

Helen’s demand for lattes.

▪ Notice that Helen’s preferences obey the law of demand.

▪ .الالتيهطلب هيلين على

▪ الحظ أن تفضيالت هيلين تخضع لقانون الطلب

Price

lattes

Quantity

of lattes

demanded

$0.00 16

1.00 14

2.00 12

3.00 10

4.00 8

5.00 6

6.00 4

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price of

Lattes

Quantity

of Lattes

Helen’s Demand Schedule & Curve

Price

lattes

Quantity

of lattes

demanded

$0.00 16

1.00 14

2.00 12

3.00 10

4.00 8

5.00 6

6.00 4

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Market Demand versus Individual Demand

▪ The quantity demanded in the market is the sum of the quantities demanded by all buyers at each price.

▪ Suppose Helen and Ken are the only two buyers in the Latte market. (Qd = quantity demanded)

Helen’s Qd

Ken’s Qd

+ = 18

+ = 21

+ = 24

Market Qd

$0.00

6.00

5.00

4.00

3.00

2.00

1.00

Price

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market Demand Curve for Lattes

P Qd

(Market)

$0.00 24

1.00 21

2.00 18

3.00 15

4.00 12

5.00 9

6.00 6

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters

▪ The demand curve shows how price affects quantity demanded,

other things being equal.

▪ These “other things” are non-price determinants of demand (i.e.,

things that determine buyers’ demand for a good, other than the good’s price).

▪ Changes in them shift the D curve…

▪ .يوضح منحنى الطلب كيف يؤثر السعر على الكمية المطلوبة ، واألشياء األخرى متساوية

▪ أي األشياء التي تحدد طلب المشترين (هي محددات الطلب غير السعرية " األشياء األخرى"هذه (.على سلعة ما ، بخالف سعر السلعة

▪ التغييرات في تحويل منحنى الطلب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: # of Buyers المشترينعدد من : منحنى الطلب على المنحنى

▪ Increase in # of buyersمهم

increases quantity demanded at each price,

shifts D curve to the right.

▪ زيادة عدد المشترين يزيد الكمية المطلوبة عند كل سعر ، ويحول .منحنى الطلب إلى اليمين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Suppose the number of

buyers increases.

Then, at each P,

Qd will increase

(by 5 in this example).

.لنفترض أن عدد المشترين يزداد

الكمية ثم ، في كل سعر ، سيزداد (.في هذا المثال 5بمقدار (المطلوبه

Demand Curve Shifters: # of Buyers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Incomeمهم

▪ Demand for a normal good is positively related to income.

▪ Increase in income causes increase in quantity demanded at each price, shifts D curve to

the right.

▪ .يرتبط الطلب على سلعة عادية بشكل إيجابي بالدخل

▪ .زيادة الدخل تسبب زيادة في الكمية المطلوبة عند كل سعر ، وتغيير منحنى الطلب إلى اليمين

(Demand for an inferior good is negatively related to income. An

increase in income shifts D curves for inferior goods to the left.)

تؤدي الزيادة في الدخل إلى تحّول منحنيات . يرتبط الطلب على سلعة أدنى ارتباطاً سلبياً بالدخل( (.الطلب للسلع األدنى إلى اليسار

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

▪ Two goods are substitutes if an increase in the price of one causes

an increase in demand for the other. ▪ اآلخرسلعتان بديلتان إذا أدت الزيادة في سعر واحد إلى زيادة الطلب على

▪ Example: pizza and hamburgers. An increase in the price of pizza increases

demand for hamburgers, shifting hamburger demand curve to the right.

▪ زيادة في سعر البيتزا يزيد الطلب على الهامبرغر ، ويحول منحنى طلب الهامبرغر . البيتزا والهامبرغر: مثال .إلى اليمين

▪ Other examples: Coke and Pepsi, laptops and desktop computers,CDs and

music downloads

▪ ، وأجهزة الكمبيوتر المحمولة وأجهزة الكمبيوتر المكتبية ، واألقراص المدمجة فحم الكوك و بيسي : أمثلة أخرى وتنزيل الموسيقى

Demand Curve Shifters: Prices of Related Goods أسعار السلع ذات الصلة: الطلبمحول منحنى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

▪ Two goods are complements if an increase in the price of one

causes a fall in demand for the other.

▪ اآلخرالطلب على تسبب في انخفاض هناك سلعتان متكاملتان إذا أدت الزيادة في سعر واحد

▪ Example: computers and software. If price of computers rises, people buy

fewer computers, and therefore less software. Software demand curve shifts

left.

▪ إذا ارتفع سعر أجهزة الكمبيوتر ، يشتري الناس عدًدا أقل . أجهزة الكمبيوتر والبرمجيات: على سبيل المثال .ينتقل الى اليسارمنحنى الطلب على البرامج . من أجهزة الكمبيوتر ، وبالتالي يقل عدد البرامج

▪ Other examples: college tuition and textbooks,

bagels and cream cheese, eggs and bacon

Demand Curve Shifters: Prices of Related Goods أسعار السلع ذات الصلة: الطلبمحول منحنى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Tastes محوالت منحنى الطلب: االذواق

▪ Anything that causes a shift in tastes toward a good will increaseمهم

إلى اليمين. ▪ الزياده دايم تحول المنحنى الى اليمين والنقص يحوله الى اليسار“ ”

▪ Example:

The Atkins diet became popular in the ’90s,

caused an increase in demand for eggs,

shifted the egg demand curve to the right.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Demand Curve Shifters: Expectations التوقعات:الطلب محوالت منحنى

▪ Expectations affect consumers’ buying decisions. ▪ .تؤثر التوقعات على قرارات الشراء لدى المستهلكين

▪ Examples:

▪ If people expect their incomes to rise,

their demand for meals at expensive restaurants may increase now.

▪ If the economy sours and people worry about their future job security,

demand for new autos may fall now.

▪ :أمثلة

▪ إذا كان الناس يتوقعون ارتفاع دخولهم ، فقد يزداد اآلن طلبهم على وجبات الطعام في المطاعم باهظة .الثمن

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Summary: Variables That Influence Buyers

Variable A change in this variable…

Price …causes a movement along the D curve

# of buyers …shifts the D curve

Income …shifts the D curve

Price of related goods …shifts the D curve

Tastes …shifts the D curve

Expectations …shifts the D curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Demand Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. The price of iPods falls انخفاض سعر االيبود

B. The price of music downloads

falls

C. تنزيالت الموسيقىانخفاض سعر

C. The price of CDs falls

D. انخفاض سعر السي دي

Draw a demand curve for music downloads. What happens to it in each

of the following scenarios? Why? ؟اولماذا ماذا يحدث لها في كل من السيناريوهات التالية؟ . ارسم منحنى طلب على تنزيالت الموسيقى

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price of music down- loads

Quantity of music downloads

D1 D2

Music downloads and

iPods are complements.

A fall in price of iPods

shifts the demand curve for

music downloads

to the right.

تنزيالت الموسيقى وأجهزة أي بود هي .مكملة

إلى " االيبود»يؤدي انخفاض سعر الطلب لتنزيل الموسيقى تغييرمنحنى

.إلى اليمين

ACTIVE LEARNING 1

A. Price of iPods falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The D curve does not shift.

Move down along curve to a

point with lower P, higher Q.

.ال يتغير منحنى الطلب

التحرك ألسفل على طول المنحنى إلى نقطة أكبروكمية مع انخفاض السعر ،

Price of music down- loads

Quantity of music downloads

Q1 Q2

ACTIVE LEARNING 1

B. Price of music downloads falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CDs and music downloads

are substitutes.

A fall in price of CDs shifts

demand for music downloads

to the left.

االقراص المدمجه وتنزيل الموسيقى هي .بدائل

انخفاض سعر االقراص المدمجه يغير .الطلب على تنزيالت الموسيقى الى اليسار

Price of music down- loads

Quantity of music downloads

D1 D2

ACTIVE LEARNING 1

C. Price of CDs falls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply

▪ The quantity supplied of any good is the amount that sellers are

willing and able to sell. ▪ .الكمية المعروضة من أي سلعة هي المبلغ الذي يرغب البائع في بيعه وقادر على بيعه

▪ Law of supply: the claim that the quantity supplied of a good rises

when the price of the good rises, other things equal

▪ السلعه، االمور عندما يرتفع سعر السلعه ترتفع االدعاء بأن الكمية الموردة من : قانون التوريد األخرى متساوية

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

▪ Supply schedule:

A table that shows the relationship between

the price of a good and the quantity supplied.

▪ جدول يبين العالقة بين سعر السلعة والكمية : جدول العرض .المعروضة

▪ Example:

Starbucks’ supply of lattes.

▪ مثل عرض ستاربكس من الالتيه

The Supply Schedule

▪ Notice that Starbucks’ supply

schedule obeys the law of supply. ▪ الحظ أن جدول التوريد لستاربكس يخضع لقانون

.التوريد

▪

Price

lattes

Quantity

of lattes

supplied

$0.00 0

1.00 3

2.00 6

3.00 9

4.00 12

5.00 15

6.00 18

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Starbucks’ Supply Schedule & Curve

Price

lattes

Quantity

of lattes

supplied

$0.00 0

1.00 3

2.00 6

3.00 9

4.00 12

5.00 15

6.00 18

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Market Supply versus Individual Supply ▪ The quantity supplied in the market is the sum of

the quantities supplied by all sellers at each price.

▪ Suppose Starbucks and Jitters are the only two sellers in this market. (Qs = quantity supplied)

▪ .الكمية المعروضة في السوق هي مجموع الكميات التي يقدمها جميع البائعين عند كل سعر

▪ .لنفترض أن ستاربكس و جيترز هما البائعان الوحيدان في هذا السوق

Starbucks

Jitters

+ = 10

+ = 5

+ = 0

Market Qs

$0.00

6.00

5.00

4.00

3.00

2.00

1.00

Price

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

P QS

(Market)

$0.00 0

1.00 5

2.00 10

3.00 15

4.00 20

5.00 25

6.00 30

The Market Supply Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shiftersمحول منحنى العرض

▪ The supply curve shows how price affects quantity supplied, other

things being equal. ▪ يوضح منحنى العرض كيف يؤثر السعر على الكمية المعروضة ، بينما تساوي األشياء األخرى

▪ These “other things” are non-price determinants of supply.

▪ .هي محددات العرض غير السعرية" األشياء األخرى"هذه

▪ Changes in them shift the S curve…

▪ تغيرات في تحويل منحنى العرض

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Input Prices أسعار :محوالت منحنى العرض المدخالت

▪ Examples of input prices:

wages, prices of raw materials.

▪ A fall in input prices makes production

more profitable at each output price,

so firms supply a larger quantity at each price,

and the S curve shifts to the right.

▪ .األجور ، أسعار المواد الخام: أمثلة على أسعار المدخالت

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Suppose the price of

milk falls.

At each price, the

quantity of

lattes supplied

will increase

(by 5 in this example).

.لنفترض انخفاض سعر الحليب

عند كل سعر ، ستزداد كمية التيه (في هذا المثال 5بمقدار (الموردة

Supply Curve Shifters: Input Prices

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Technology

▪ Technology determines how much inputs are required to

produce a unit of output.

▪ A cost-saving technological improvement has

the same effect as a fall in input prices,

shifts S curve to the right.

▪ .تحدد التكنولوجيا كمية المدخالت المطلوبة إلنتاج وحدة من المخرجات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: # of Sellers محوالت منحنى العرض: عدد من البائعين

▪ An increase in the number of sellers increases

the quantity supplied at each price,

shifts S curve to the right.

الزياده في عدد البائعين يزيد الكميه المعروضه عند كل سعر

ويحول منحنى العرض الى اليمين

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply Curve Shifters: Expectations

▪ Example:

▪ Events in the Middle East lead to expectations of higher oil prices.

▪ In response, owners of Texas oilfields reduce supply now, save some

inventory to sell later at the higher price.

▪ S curve shifts left.

▪ :مثال

▪ .األحداث في الشرق األوسط تؤدي إلى توقعات بارتفاع أسعار النفط

▪ رداً على ذلك ، يخفض أصحاب حقول النفط في تكساس العرض اآلن ، باستثناء بعض المخزون لبيعه الحقاً بسعر .أعلى

▪ .الى اليسارتحول منحنى العرض

▪ In general, sellers may adjust supply* when their expectations of

future prices change. (*If good not perishable)

▪ إذا كانت جيدة غير قابلة . (* عندما تتغير توقعاتهم من األسعار المستقبلية* بشكل عام ، يمكن للبائعين تعديل العرض (للتلف

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Variable A change in this variable…

Summary: Variables that Influence Sellers

Price …causes a movement along the S curve

Input Prices …shifts the S curve

Technology …shifts the S curve

# of Sellers …shifts the S curve

Expectations …shifts the S curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Draw a supply curve for tax return

preparation software. What happens to it in each of the following scenarios?

ماذا . ارسم منحنى عرض لبرنامج إعداد اإلقرار الضريبي يحدث لها في كل من السيناريوهات التالية؟ A. A. Retailers cut the price of

the software. B. .خفض تجار التجزئة سعر البرنامج

B. B. A technological advance allows the software to be produced at lower cost.

C. .يسمح التقدم التكنولوجي أن يتم إنتاج البرنامج بتكلفة أقل

C. C. Professional tax return preparers raise the price of the services they provide.

D. .يقوم معدو اإلقرار الضريبي المحترفون برفع سعر الخدمات التي يقدمونها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Supply Curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S curve does

not shift. Move down

along the curve to a lower

P and lower Q.

.منحنى العرض ال يتغير

التحرك ألسفل على طول المنحنى إلى انخفاض السعر وانخفاض الكمية

Price of tax return software

Quantity of tax return software

Q1 Q2

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

A. Fall in price of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S curve shifts to the

right:

at each price,

Q increases.

منحنى العرض ينتقل إلى :اليمين

عند كل سعر ، تزداد الكمية

Price of tax return software

Quantity of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

B. Fall in cost of producing the software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

This shifts the demand

curve for tax preparation

software, not the supply

curve.

هذا يغير منحنى الطلب على برامج إعداد الضرائب ، وليس منحنى

.العرض

Price of tax return software

Quantity of tax return software

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

C. Professional preparers raise their price

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply and Demand Together

D S Equilibrium: P has reached

the level where

quantity supplied equals

quantity demanded

وصل السعر إلى المستوى الذي تساوي الكمية المعروضة الكمية المطلوبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S P

Equilibrium price:

P QD QS

$0 24 0

1 21 5

2 18 10

3 15 15

4 12 20

5 9 25

6 6 30

the price that equates quantity supplied with quantity demanded السعر الذي يساوي الكمية المعروضة مع الكمية المطلوبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S P

Equilibrium quantity:

P QD QS

$0 24 0

1 21 5

2 18 10

3 15 15

4 12 20

5 9 25

6 6 30

the quantity supplied and quantity demanded at the equilibrium price الكمية المعروضة والكمية المطلوبة عند سعر التوازن

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded عندما تكون الكمية المعروضة أكبر من الكمية المطلوبة

Surplus Example: If P = $5,

then QD = 9 lattes

and QS = 25 lattes

resulting in a surplus of 16 lattes

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded

Facing a surplus, sellers try to increase sales by cutting price.

في مواجهة الفائض ، يحاول البائعون زيادة المبيعات .عن طريق خفض السعر

This causes QD to rise

Surplus

…which reduces the

surplus. .مما يقلل من الفائض

and QS to fall…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Surplus (a.k.a. excess supply): when quantity supplied is greater than quantity demanded

Facing a surplus, sellers try to increase sales by cutting price.

This causes QD to rise and QS to fall.

Surplus

Prices continue to fall until

market reaches equilibrium. تستمر األسعار في االنخفاض حتى يصل السوق إلى التوازن

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied عندما تكون الكمية المطلوبة أكبر من الكمية المعروضة

Example: If P = $1,

then QD = 21 lattes

and QS = 5 lattes

resulting in a shortage of 16 lattes

Shortage

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied

Facing a shortage, sellers raise

the price, في مواجهة النقص ، يرفع البائع السعر causing QD to fall

…which reduces the shortage.

and QS to rise,

Shortage

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

D S

Shortage (a.k.a. excess demand): when quantity demanded is greater than quantity supplied

Facing a shortage, sellers raise the price,

causing QD to fall

and QS to rise.

Shortage

Prices continue to rise until market reaches equilibrium.

تستمر األسعار في االرتفاع حتى يصل السوق إلى .التوازن

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Three Steps to Analyzing Changes in Eq’m

To determine the effects of any event,

1. Decide whether event shifts S curve,

D curve, or both.

2. Decide in which direction curve shifts.

3. Use supply—demand diagram to see

how the shift changes eq’m P and Q.

4. لتحديد تأثيرات أي حدث ،

5. .قرر ما إذا كان الحدث سيؤدي إلى تحّول منحنى العرض أو منحنى الطلب أو كليهما. 1

6. .تقرر في أي اتجاه منحنى التحوالت. 2

7. لكميةواسعر التوازن في كيفية ان التحول يغير لطلب لمعرفة ا -ض لعرامخطط م ستخدا 3.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE: The Market for Hybrid Cars

price of hybrid cars

quantity of hybrid cars

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

STEP 1:

D curve shifts

because price of gas

affects demand for

hybrids.

S curve does not

shift, because price

of gas does not

affect cost of

producing hybrids.

STEP 2:

D shifts right

because high gas

price makes hybrids

more attractive

relative to other cars.

EXAMPLE 1: A Shift in Demand

EVENT TO BE

ANALYZED:

Increase in price of gas.

STEP 3:

The shift causes an

increase in price

and quantity of

hybrid cars.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE 1: A Shift in Demand

Notice:

When P rises, producers

supply

a larger quantity

of hybrids, even though the

S curve has not shifted. عندما يرتفع السعر ، يقدم : مالحظة

المنتجون كمية أكبر من السيارات الهجينة ، على الرغم من أن منحنى العرض لم يتغير

Always be careful

to distinguish b/w

a shift in a curve

and a movement

along the curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Terms for Shift vs. Movement Along Curveمهم

▪ Change in supply: a shift in the S curve

occurs when a non-price determinant of supply changes (like technology or

costs)

تحول في منحنى العرض: التغير في العرض

(مثل التكنولوجيا أو التكاليف(يحدث عندما يكون هناك محدد غير السعر لتغير العرض

▪ Change in the quantity supplied:

a movement along a fixed S curve occurs when P changes

▪ عندما يتغير السعريحدث , ثابتحركة على منحنى عرض : التغيير في الكمية المعروضة

▪ Change in demand: a shift in the D curve

occurs when a non-price determinant of demand changes (like income or #

of buyers)

تحول في منحنى الطلب: التغيير في الطلب

(مثل الدخل أو عدد المشترين(يحدث عندما يتغير محدد غير السعر في الطلب

▪ Change in the quantity demanded:

a movement along a fixed D curve

occurs when P changes

حركة على منحنى الطلب الثابت: التغيير في الكمية المطلوبة

يحدث عندما يتغير السعر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

STEP 1:

S curve shifts

because event affects

cost of production.

D curve does not

shift, because

production technology

is not one of the

factors that affect

demand.

STEP 2:

S shifts right

because event

reduces cost,

makes production

more profitable at

any given price.

EXAMPLE 2: A Shift in Supplyمهم

EVENT: New technology

reduces cost of producing hybrid cars.

تقلل التكنولوجيا الجديدة من تكلفة إنتاج السيارات .الهجينة

STEP 3:

The shift causes price to

fall and quantity to rise. التحول يؤدي إلى انخفاض السعر والكمية في االرتفاع

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE 3: A Shift in Both Supplyمهم

and Demand P

EVENTS: Price of gas rises AND new technology reduces production costs

جديدة تقلل تكاليف اإلنتاجالغاز يرتفع وتقنية سعر

STEP 1:

Both curves shift.

STEP 2:

Both shift to the right.

STEP 3:

Q rises, but effect on P is ambiguous:

If demand increases more than supply, P rises.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

EXAMPLE 3: A Shift in Both Supply

and Demand

STEP 3, cont.

EVENTS: price of gas rises AND new technology reduces production costs

But if supply

increases more

than demand,

P falls.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Use the three-step method to analyze the effects of each event on the

Event A: A fall in the price of CDs

المدمجهانخفاض في أسعار األقراص

Event B: Sellers of music downloads negotiate a reduction in the

royalties they must pay for each song they sell.

يبيعونهايتفاوض بائعو تنزيالت الموسيقى على انخفاض في اإلتاوات التي يجب عليهم دفعها مقابل كل أغنية

Event C: Events A and B both occur.

ACTIVE LEARNING 3

Shifts in supply and demand

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. D shifts left

The market for music downloads

1. D curve shifts

3. P and Q both fall.

STEPS

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

A. Fall in price of CDs

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The market for music downloads

1. S curve shifts

2. S shifts right

3. P falls, Q rises.

STEPS

(Royalties are part of sellers’ costs)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

B. Fall in cost of royalties

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

STEPS

1. Both curves shift (see parts A & B).

2. D shifts left, S shifts right.

3. P unambiguously falls.

Effect on Q is ambiguous:

The fall in demand reduces Q,

the increase in supply increases Q.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

C. Fall in price of CDs and fall in cost of royalties

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION:

How Prices Allocate Resources

▪ One of the Ten Principles from Chapter 1:

Markets are usually a good way

to organize economic activity.

▪ In market economies, prices adjust to balance

supply and demand. These equilibrium prices

are the signals that guide economic decisions

and thereby allocate scarce resources.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A competitive market has many buyers and sellers, each of whom

.السوق

• Economists use the supply and demand model to analyze competitive markets.

• .يستخدم االقتصاديون نموذج العرض والطلب لتحليل األسواق التنافسية

• The downward-sloping demand curve reflects the law of demand, which

states that the quantity buyers demand of a good depends negatively on the

good’s price.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Besides price, demand depends on buyers’ incomes, tastes, expectations, the prices of substitutes and complements, and number of buyers.

إذا تغير أحد هذه العوامل ، ينحرف منحنى الطلب. المشترين

• The upward-sloping supply curve reflects the Law of Supply, which states

that the quantity sellers supply depends positively on the good’s price.

• Other determinants of supply include input prices, technology, expectations,

and the # of sellers. Changes in these factors shift the S curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The intersection of S and D curves determines the market

equilibrium. At the equilibrium price, quantity supplied equals

quantity demanded. • المعروضه عند سعر التوازن ، الكمية . يحدد تقاطع منحنيات العرض والطلب توازن السوق

المطلوبةالكمية تساوي

• If the market price is above equilibrium, a surplus results, which

causes the price to fall. If the market price is below equilibrium,

a shortage results, causing the price to rise.

.السعر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• We can use the supply-demand diagram to analyze the effects of

any event on a market: First, determine whether the event shifts one or both curves.

Second, determine the direction of the shifts. Third, compare the

.ثالثًا ، قارن التوازن الجديد بالمتوازن األول. اتجاه التحوالتتحديد الثانية ، . يغير أحد المنحني أو كليهما

• In market economies, prices are the signals that guide economic

decisions and allocate scarce resources.

• .في األسواق االقتصادية ، األسعار هي اإلشارات التي توجه القرارات االقتصادية وتخصص الموارد النادرة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Supply, Demand, and

Government Policies Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

1 1

In this chapter,

look for the answers to these questions:

• What are price ceilings and price floors?

What are some examples of each?

• How do price ceilings and price floors affect

market outcomes?

• How do taxes affect market outcomes?

How do the effects depend on whether

the tax is imposed on buyers or sellers?

• What is the incidence of a tax?

What determines the incidence?

Government Policies That Alter the Private Market Outcome سياسات الحكومة التي تغير نتائج السوق الخاصة

 Price controls التحكم في السعر

 Price ceiling: a legal maximum on the price of a good or service Example: rent control

 اإليجاراتمراقبة : الحد األقصى القانوني لسعر السلعة أو الخدمة مثال: سقف السعر

 Price floor: a legal minimum on the price of a good or service Example: minimum wage

 الحد األدنى لألجور: حد أدنى قانوني على سعر السلعة أو الخدمة مثال: أرض السعر 

 Taxes  The govt can make buyers or sellers pay a specific amount on

each unit.  .يمكن للحكومة أن تجعل المشترين أو البائعين يدفعون مبلغًا محدًدا في كل وحدة

We will use the supply/demand model to see

how each policy affects the market outcome (the price buyers pay, the price sellers receive, and eq’m

quantity).

السعر الذي )الطلب لنرى كيف تؤثر كل سياسة على نتائج السوق / سوف نستخدم نموذج العرض (.يدفعه المشترون ، ويتلقى البائعون الثمن ، وكمية التوازن

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3 3

EXAMPLE 1: The Market for Apartmentsمهم

Eq’m w/o price

controls

Q D

S Rental price of

apts

$800

300

Quantity of apts

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4 4

How Price Ceilings Affect Market Outcomes كيف تؤثر سقوف السعر على نتائج السوق

A price ceiling above the

eq’m price is

not binding—

has no effect

on the market

outcome.

سقف السعر فوق سعر -التوازن غير ملزم

ليس له أي تأثير على .نتائج السوق

Q D

$800

300

Price ceiling

$1000

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5 5

How Price Ceilings Affect Market Outcomes

The eq’m price ($800)

is above the ceiling

and therefore illegal.

( دوالر 800)سعر التوازن فوق السقف وبالتالي غير

.قانوني

The ceiling

is a binding

constraint

on the price, causes a

shortage.

السقف هو قيد ملزم على السعر .، يسبب نقصا

Q D

$800

Price ceiling

$500

250 400

shortage

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6 6

How Price Ceilings Affect Market Outcomes

In the long run,

supply and demand are more

price-elastic.

So, the shortage is larger.

على المدى الطويل ، يكون العرض والطلب أكثر السعر .مرونة

.لذا ، فإن النقص أكبر

Q D

$800

150

Price ceiling

$500

450

shortage

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

7 7

Shortages and Rationing العجز والتقنين  With a shortage, sellers must ration the goods among buyers.

 .مع وجود نقص ، يجب على البائعين تقنين البضائع بين المشترين

 Some rationing mechanisms: (1) Long lines

(2( Discrimination according to sellers’ biases

 البائعينالتمييز وفقاً لتحيزات ( 2)الخطوط الطويلة ( 1: )بعض آليات الترشيد

 These mechanisms are often unfair, and inefficient: the goods do

not necessarily go to the buyers who value them most highly.

 فالسلع ال تذهب بالضرورة إلى المشترين الذين يقدرونها : وغالبا ما تكون هذه اآلليات غير عادلة وغير فعالة .بدرجة عالية

 In contrast, when prices are not controlled ,the rationing mechanism

is efficient (the goods go to the buyers that value them most highly) and impersonal (and thus fair).

 حيث تذهب البضائع إلى المشترين )وفي المقابل ، عندما ال يتم التحكم في األسعار ، تكون آلية التقنين فعالة (.وبالتالي عادلة)وغير شخصية ( الذين يقدرونها أعلى قيمة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

8 8

EXAMPLE 2: The Market for Unskilled Labor سوق العمالة غير الماهرة

Eq’m w/o price

controls

L D

S Wage paid to

unskilled workers

$6.00

500

Quantity of unskilled workers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

9 9

How Price Floors Affect Market Outcomes السعر على نتائج السوقؤثر ارضيات كيف ت

L D

$6.00

500

Price floor

$5.00

A price floor below the eq’m price is not binding – has no effect on the market outcome.

إن أرضية السعر التي تقل عن سعر التوازن

وليس لها -غير ملزمة أي تأثير على نتائج .السوق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

10 10

How Price Floors Affect Market Outcomes

L D

$6.00

Price floor

$7.25

The eq’m wage ($6) is below

the floor and therefore

illegal.

The floor

is a binding constraint

on the wage,

causes a

surplus (i.e., unemployment).

هو أقل ( دوالرات 6)إن األجر المتوازن .فهو غير قانونيالحد األدنى وبالتالي من

ملزم على قيد ( الحد األدنى)إن األرضية أي )األجور ، مما يؤدي إلى وجود فائض

(.البطالة 400 550

labor

surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

11 11

Min wage laws

do not affect

highly skilled workers.

They do affect teen

workers.

Studies:

A 10% increase

in the min wage raises

teen unemployment

by 1–3%.

قوانين الحد األدنى لألجور ال تؤثر .على العمال ذوي المهارات العالية

.انهم يؤثرون على العمال المراهقين

٪ في الحد 10زيادة : الدراسات األدنى لألجور تزيد البطالة بين

.٪3-1المراهقين بنسبة

The Minimum Wage

L D

$6.00

Min. wage

$7.25

400 550

unemp-

loyment

A C T I V E L E A R N I N G 1

Price controls

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Determine effects of:

A. $90 price ceiling ( shortage)

B. $90 price floor( not binding )

C. $120 price floor ( surplus )

A C T I V E L E A R N I N G 1

A. $90 price ceiling

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

The price

falls to $90.

Buyers

demand

120 rooms,

sellers supply

90, leaving a

shortage.

shortage = 30

Price ceiling

A C T I V E L E A R N I N G 1

B. $90 price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Eq’m price is above the floor,

so floor is not

binding.

P = $100,

Q = 100 rooms. Price floor

A C T I V E L E A R N I N G 1

C. $120 price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

The price

rises to $120.

Buyers

demand

60 rooms,

sellers supply

120, causing a

surplus.

surplus = 60

Price floor

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

16 16

Evaluating Price Controlsتقييم ضوابط السعر

 Recall one of the Ten Principles from Chapter 1: Markets are usually a good way to organize economic activity.

 .األسواق عادة ما تكون وسيلة جيدة لتنظيم النشاط االقتصادي

 Prices are the signals that guide the allocation of society’s resources. This allocation is altered when policymakers restrict prices.

 يتم تغيير هذا التخصيص عندما يقوم . األسعار هي اإلشارات التي توجه تخصيص موارد المجتمع .صناع السياسة بتقييد األسعار

 Price controls often intended to help the poor, but often hurt more than help.

 غالبًا ما كانت ضوابط األسعار تهدف إلى مساعدة الفقراء ، ولكنها غالباً ما تؤذي أكثر من .المساعدة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

17 17

Taxes

 The govt levies taxes on many goods & services to raise

revenue to pay for national defense, public schools, etc.

 تفرض الحكومة ضرائب على العديد من السلع والخدمات لزيادة العائدات لدفع تكاليف الدفاع .الوطني والمدارس العامة ، إلخ

 The govt can make buyers or sellers pay the tax.

 .يمكن للحكومة أن تجعل المشترين أو البائعين يدفعون الضرائب

 The tax can be a % of the good’s price, or a specific amount for each unit sold.

 .سعر السلعة ، أو مبلغًا محدًدا لكل وحدة مباعةالضريبة نسبه من يمكن أن تكون

 For simplicity, we analyze per-unit taxes only.

 .من أجل البساطة ، نقوم بتحليل الضرائب لكل وحدة فقط

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18 18

EXAMPLE 3: The Market for Pizza

Eq’m w/o tax P

$10.00

500

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

19 19

$10.00

500

A Tax on Buyers

The price buyers pay

is now $1.50 higher than

the market price P.

P would have to fall

by $1.50 to make

buyers willing

to buy same Q

as before.

E.g., if P falls

from $10.00 to $8.50,

buyers still willing to

purchase 500 pizzas.

Q D2

Effects of a $1.50 per unit tax on buyers

$8.50

Hence, a tax on buyers

shifts the D curve down

by the amount of the tax.

Tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

20 20

$10.00

500

A Tax on Buyers

Q D2

$11.00 PB =

$9.50 PS =

Tax

Effects of a $1.50 per unit tax on buyers

New eq’m:

Q = 450

Sellers

receive

PS = $9.50

Buyers pay

PB = $11.00

Difference

between them

= $1.50 = tax 450

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21 21

450

The Incidence of a Tax: حدوث الضريبه

how the burden of a tax is shared among market

participantsكيف يتم تقاسم عبء الضريبة بين المشاركين في السوق

$10.00

500

$11.00 PB =

$9.50 PS =

Tax

In our example,

buyers pay $1.00 more,

sellers get

$0.50 less.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

22 22

A Tax on Sellers

$10.00

500

Effects of a $1.50 per unit tax on sellers

The tax effectively raises sellers’ costs by $1.50 per pizza.

Sellers will supply 500 pizzas

only if P rises to $11.50,

to compensate for

this cost increase.

ترفع الضريبة بشكل فعال تكاليف البائعين بمقدار .دوالر لكل بيتزا 1.50

بيتزا فقط إذا ارتفع السعر إلى 500سيزود البائعون دوالر ، للتعويض عن هذه الزيادة في 11.50

.التكلفة

$11.50

Hence, a tax on sellers shifts the

S curve up by the amount of the tax.

ومن ثم ، فإن فرض ضريبة على البائعين يغير منحنى العرض بمقدار الضريبة

Tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

23 23

A Tax on Sellers

$10.00

500

450

$11.00 PB =

$9.50 PS =

Tax

Effects of a $1.50 per unit tax on sellers

New eq’m:

Q = 450

Buyers pay

PB = $11.00

Sellers

receive

PS = $9.50

Difference

between them

= $1.50 = tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

24 24

The Outcome Is the Same in Both Cases!

What matters is this:

A tax drives a wedge between the price buyers pay and the price sellers receive.

:ما يهم هو

تدفع الضريبة إسفينًا بين السعر الذي يدفعه المشترون ويتلقى البائعون السعر

$10.00

500 450

$9.50

$11.00 PB =

PS =

Tax

The effects on P and Q, and the tax incidence are the same whether the

tax is imposed on buyers or sellers!

اآلثار على السعر والكمية ، وحدوث الضريبة هي نفسها سواء فرضت الضريبة على المشترين أو البائعين

A C T I V E L E A R N I N G 2

Effects of a tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Suppose govt

imposes a tax

on buyers of

$30 per room.

Find new

Q, PB, PS,

and incidence

of tax.

A C T I V E L E A R N I N G 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

100

110

120

130

140

50 60 70 80 90 100 110 120 130Q

P S

The market for hotel rooms

Q = 80

PB = $110

PS = $80

Incidence

buyers: $10

sellers: $20

Tax

PB =

PS =

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

27 27

Elasticity and Tax Incidence المرونة والضرائب

CASE 1: Supply is more elastic than demand

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Price if no tax

It’s easier for sellers than

buyers to leave

the market.

So buyers bear

most of the

burden of the tax.

من األسهل للبائعين أكثر من المشترين مغادرة .السوق

لذلك يتحمل المشترون .معظم عبء الضريبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

28 28

Elasticity and Tax Incidence

CASE 2: Demand is more elastic than supply

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Price if no tax

It’s easier for buyers than

sellers to leave

the market.

Sellers bear most

of the burden of

the tax.

يسهل على المشترين من .البائعين مغادرة السوق

يتحمل البائعون معظم .عبء الضريبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

29 29

CASE STUDY: Who Pays the Luxury Tax?

 1990: Congress adopted a luxury tax on yachts,

private airplanes, furs, expensive cars, etc.

 Goal: raise revenue from those who could most

easily afford to pay—wealthy consumers.

 But who really pays this tax?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

30 30

CASE STUDY: Who Pays the Luxury Tax?

The market for yachts

Tax

Buyers’ share of tax burden

Sellers’ share of tax burden

Demand is price-elastic.

In the short run, supply is inelastic.

Hence, companies that build yachts pay most of the tax.

A C T I V E L E A R N I N G 3

The 2011 payroll tax cut 2011تخفيض ضريبة الرواتب

 Prior to 2011, the Social Security payroll tax was 6.2% taken from

workers’ pay and 6.2% paid by employers (total 12.4%).

 ٪ تدفع 6.2٪ من أجور العمال و 6.2، بلغت ضريبة الرواتب على الضمان االجتماعي 2011قبل عام (.٪ 12.4ما مجموعه )من قبل أرباب العمل

 The Tax Relief Act (2010( reduces the worker’s portion from 6.2% to 4.2% (for 2011 only(, but leaves the employer’s portion at 6.2%.

 ، ولكنه ( فقط 2011لعام )٪ 4.2٪ إلى 6.2حصة العامل من ( 2010)ويخفض قانون تخفيف الضرائب .٪6.2يترك حصة صاحب العمل عند

QUESTION:

Will the typical worker’s take-home pay rise by exactly 2%, more than 2%, or less than 2%? Do any elasticities affect your answer?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 3

Answers

 As long as labor supply and labor demand both have price elasticity

> 0, the tax cut will be shared by workers and employers, i.e., workers’ take-home pay will rise less than 2%.

 ، فإن حصة العمال وأرباب العمل < 0وطالما أن الطلب على العمالة واليد العاملة لهما المرونة السعرية .في المائة 2سوف تتسبب في تخفيض الضرائب ، أي أن رواتب العاملين في المنازل سترتفع بنسبة أقل من

 The answer does NOT depend on whether labor demand is more or

less elastic than labor supply.

 .ال تعتمد اإلجابة على ما إذا كان الطلب على العمالة أكثر مرونة أو أقل من عرض العمالة

FOLLOW-UP QUESTION:

Who gets the bigger share of this tax cut, workers or employers? How do elasticities determine the answer?

الذي يحصل على الحصة األكبر من هذا التخفيض الضريبي ، العمال أو أرباب العمل؟ كيف تحدد المرونة من اإلجابة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A C T I V E L E A R N I N G 3

Answers to follow-up question

 If labor demand is more elastic than labor supply,

workers get more of the tax cut than employers.

 إذا كان الطلب على العمالة أكثر مرونة من عرض العمالة ، فإن العمال يحصلون على المزيد من .التخفيضات الضريبية مقارنة بأرباب العمل

 If labor demand is less elastic than labor supply,

employers get the larger share of the tax cut.

 إذا كان الطلب على العمالة أقل مرونة من عرض العمالة ، يحصل أصحاب العمل على حصة .أكبر من خفض الضرائب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

34 34

CONCLUSION: Government Policies and the Allocation of Resources

 Each of the policies in this chapter affects the

allocation of society’s resources.  Example 1: A tax on pizza reduces eq’m Q.

With less production of pizza, resources

(workers, ovens, cheese) will become available

to other industries.

 Example 2: A binding minimum wage causes

a surplus of workers, a waste of resources.

 So, it’s important for policymakers to apply such policies very carefully.

S U M M AR Y

• A price ceiling is a legal maximum on the price of a good. An

example is rent control. If the price ceiling is below the eq’m price, it is binding and causes a shortage.

• A price floor is a legal minimum on the price of a good. An example

is the minimum wage. If the price floor is above the eq’m price, it is binding

and causes a surplus. The labor surplus caused by the minimum

wage is unemployment.

.الحد األدنى لألجور هو البطالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

S U M M AR Y

• A tax on a good places a wedge between the price buyers pay and

the price sellers receive, and causes the eq’m quantity to fall, whether the tax is imposed on buyers or sellers.

• The incidence of a tax is the division of the burden of the tax

between buyers and sellers, and does not depend on whether the tax is imposed on buyers or sellers.

• The incidence of the tax depends on the price elasticities of supply

and demand.

• .يعتمد معدل الضريبة على المرونة السعرية للعرض والطلب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumers, Producers, and

the Efficiency of Markets Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What is consumer surplus? How is it related to

the demand curve?

• What is producer surplus? How is it related to

the supply curve?

• Do markets produce a desirable allocation of

resources? Or could the market outcome be

improved upon?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Welfare Economics

▪ Recall, the allocation of resources refers to: ▪ :تذكير، بتخصيص الموارد يشير إلى

▪ how much of each good is produced ▪ يتم إنتاج كم من كل منتج

▪ which producers produce it ▪ من هم المنتجين الذين ينتجونها

▪ which consumers consume it ▪ المستهلكين التي تستهلك

▪ Welfare economics studies how the allocation of resources affects

economic well-being.

▪ First, we look at the well-being of consumers.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Willingness to Pay (WTP) A buyer’s willingness to pay for a good is the maximum amount the buyer will

pay for that good.

WTP measures how much the buyer values the good.

name WTP

Anthony $250

Chad 175

Flea 300

John 125

Example:

4 buyers’ WTP for an iPod

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

WTP and the Demand Curve

Q: If price of iPod is $200, who will buy an iPod, and

what is quantity demanded?

A: Anthony & Flea will buy an iPod,

Chad & John will not.

Hence, Qd = 2

when P = $200.

name WTP

Anthony $250

Chad 175

Flea 300

John 125

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

WTP and the Demand Curve

Derive the

demand

schedule:

4 John, Chad,

Anthony, Flea 0 – 125

3 Chad, Anthony,

Flea 126 – 175

2 Anthony, Flea 176 – 250

1 Flea 251 – 300

0 nobody $301 & up

Qd who buys P (price

of iPod)

name WTP

Anthony $250

Chad 175

Flea 300

John 125

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

WTP and the Demand Curve

P Qd

$301 & up 0

251 – 300 1

176 – 250 2

126 – 175 3

0 – 125 4

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

About the Staircase Shape…

This D curve looks like a staircase with 4 steps – one per buyer.

If there were a huge # of buyers, as in a competitive market,

there would be a huge # of very tiny steps,

and it would look more like a smooth curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

WTP and the Demand Curve

At any Q, the height of

the D curve is

the WTP of the marginal buyer,

the buyer who

would leave the

market if P were any higher.

Flea’s WTP

Anthony’s WTP

Chad’s WTP John’s WTP

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumer Surplus (CS) Consumer surplus is the amount a buyer is willing to pay minus the amount the buyer

actually pays:

:فائض المستهلك هو المبلغ الذي يرغب المشتري دفعه ناقص المبلغ الذي يدفعه المشتري فعال

CS = WTP – P

name WTP

Anthony $250

Chad 175

Flea 300

John 125

Suppose P = $260.

Flea’s CS = $300 – 260 = $40.

The others get no CS because they do not buy an iPod at this price.

Total CS = $40.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS and the Demand Curve P

Flea’s WTP P = $260

Flea’s CS = $300 – 260 = $40

Total CS = $40

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS and the Demand Curve P

Flea’s WTP

Anthony’s WTP

Instead, suppose P = $220

Flea’s CS = $300 – 220 = $80

Anthony’s CS = $250 – 220 = $30

Total CS = $110

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS and the Demand Curve P

The lesson:

Total CS equals

the area under

the demand curve

above the price,

from 0 to Q.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS with Lots of Buyers & a Smooth D Curve

The demand for shoes

1000s of pairs of shoes

Price per pair

At Q = 5(thousand), the marginal buyer

is willing to pay $50

for pair of shoes.

Suppose P = $30.

Then his consumer

surplus = $20.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS with Lots of Buyers & a Smooth D Curve

The demand for shoes

CS is the area b/w P and the D curve,

from 0 to Q.

Recall: area of a triangle equals

½ x base x height

Height =

$60 – 30 = $30.

So,

CS = ½ x 15 x $30

= $225.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How a Higher Price Reduces CS

If P rises to $40,

CS = ½ x 10 x $20

= $100.

Two reasons for the

fall in CS.

1. Fall in CS due to buyers leaving market

2. Fall in CS due to remaining buyers paying higher P

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

demand curve

A. Find marginal buyer’s WTP at Q = 10.

B. Find CS for P = $30.

Suppose P falls to $20. How much will CS increase due to… C. buyers entering

the market

D. existing buyers paying lower price

ACTIVE LEARNING 1

Consumer surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

demand curve

A. At Q = 10, marginal buyer’s WTP is $30.

B. CS = ½ x 10 x $10 = $50

P falls to $20.

C. CS for the additional buyers = ½ x 10 x $10 = $50

D. Increase in CS on initial 10 units = 10 x $10 = $100

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Cost and the Supply Curve

name cost

Jack $10

Janet 20

Chrissy 35

A seller will produce and sell

the good/service only if the

price exceeds his or her cost.

Hence, cost is a measure of

willingness to sell.

▪ Cost is the value of everything a seller must give up to produce a good (i.e., opportunity cost).

▪ التكلفة هي قيمة كل شيء يجب على البائع التخلي عنه إلنتاج سلعة ▪ (.أي تكلفة الفرصة البديلة)

▪ Includes cost of all resources used to produce good, including value of the seller’s time.

▪ .وتشمل تكلفة جميع الموارد المستخدمة إلنتاج السلعه، بما في ذلك قيمة الوقت للبائع

▪ Example: Costs of 3 sellers in the lawn-cutting business.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Cost and the Supply Curve

3 35 & up

2 20 – 34

1 10 – 19

0 $0 – 9

Qs P Derive the supply schedule

from the cost data:

name cost

Jack $10

Janet 20

Chrissy 35

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Cost and the Supply Curve

P Qs

$0 – 9 0

10 – 19 1

20 – 34 2

35 & up 3

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Cost and the Supply Curve

At each Q, the height of

the S curve

is the cost of the marginal seller,

the seller who would leave

the market if

the price were any lower. هامشية البائع، البائع الذي سيترك السوق

.إذا كان السعر أقل

Chrissy’s cost

Janet’s cost

Jack’s cost

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Producer Surplus

Producer surplus (PS): the

amount a seller

is paid for a good

minus the seller’s cost

)فائض المنتج PS): يتم دفع مبلغ البائع مقابل سلعة ما ، مطروًحا منه تكلفة البائع

PS = P – cost

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Producer Surplus and the S Curve

PS = P – cost

Suppose P = $25.

Jack’s PS = $15

Janet’s PS = $5

Chrissy’s PS = $0

Total PS = $20

Janet’s cost

Jack’s cost

Total PS equals the

area above the supply

curve under the price,

from 0 to Q.

Chrissy’s cost

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PS with Lots of Sellers & a Smooth S Curve

The supply of shoes

1000s of pairs of shoes

Price per pair

Suppose P = $40.

At Q = 15(thousand),

the marginal seller’s cost is $30,

and her producer

surplus is $10.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PS with Lots of Sellers & a Smooth S Curve

The supply of shoes

PS is the area b/w P and the S curve, from 0 to Q.

The height of this

triangle is $40 – 15 = $25.

So,

PS = ½ x b x h

= ½ x 25 x $25 = $312.50

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How a Lower Price Reduces PS

If P falls to $30,

PS = ½ x 15 x $15 = $112.50

Two reasons for

the fall in PS.

1. Fall in PS due to sellers leaving market

2. Fall in PS due to remaining sellers getting lower P

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Producer surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

supply curve

A. Find marginal seller’s cost at Q = 10.

B. Find total PS for P = $20.

Suppose P rises to $30. Find the increase in PS due to:

C. selling 5 additional units

D. getting a higher price on the initial 10 units

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

supply curve

A. At Q = 10, marginal cost = $20

B. PS = ½ x 10 x $20 = $100

P rises to $30.

C. PS on additional units = ½ x 5 x $10 = $25

D. Increase in PS on initial 10 units = 10 x $10 = $100

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CS, PS, and Total Surplus

CS = (value to buyers) – (amount paid by buyers)

= buyers’ gains from participating in the market

PS = (amount received by sellers) – (cost to sellers)

= sellers’ gains from participating in the market

Total surplus = CS + PS

= total gains from trade in a market

= (value to buyers) – (cost to sellers)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Market’s Allocation of Resources

▪ In a market economy, the allocation of resources

is decentralized, determined by the interactions

of many self-interested buyers and sellers.

▪ Is the market’s allocation of resources desirable? Or would a different allocation of resources make

society better off?

▪ To answer this, we use total surplus as a measure

of society’s well-being, and we consider whether

the market’s allocation is efficient.

(Policymakers also care about equality, though our

focus here is on efficiency.)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Efficiency

An allocation of resources is efficient if it maximizes total surplus. Efficiency

means: الكفاءة تعني. تخصيص الموارد فعال إذا كان يزيد الفائض الكلي

▪ The goods are consumed by the buyers who value them most highly. ▪ كبيريتم استهالك البضائع من قبل المشترين الذين يقدرونها بشكل

▪ The goods are produced by the producers with the lowest costs. ▪ التكاليفيتم إنتاج السلع من قبل المنتجين بأقل

▪ Raising or lowering the quantity of a good would not increase total surplus. ▪ الفائضإن رفع أو تخفيض كمية السلعة لن يؤدي إلى زيادة إجمالي

= (value to buyers) – (cost to sellers) Total

surplus

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Evaluating the Market Equilibrium

Market eq’m: P = $30

Q = 15,000

Total surplus = CS + PS

Is the market eq’m efficient?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Which Buyers Consume the Good?

Every buyer whose WTP is

≥ $30 will buy.

Every buyer

whose WTP is < $30 will not.

So, the buyers who value

the good most highly are the

ones who consume it.

المشترون الذين يقدرون القيمة الجيدة هم الذين يستهلكونها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Which Sellers Produce the Good?

Every seller whose cost is ≤ $30 will

produce the good.

Every seller whose cost is > $30 will

not.

So, the sellers with the

lowest cost produce the

good.

.السلعهالباعة بأقل تكلفة ينتجون

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Does Eq’m Q Maximize Total Surplus?

At Q = 20,

cost of producing

the marginal unit

is $35

value to consumers

of the marginal unit

is only $20

Hence, can increase

total surplus

by reducing Q.

This is true at any Q

greater than 15.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Does Eq’m Q Maximize Total Surplus?

At Q = 10,

cost of producing

the marginal unit

is $25

value to consumers

of the marginal unit

is $40

Hence, can increase

total surplus

by increasing Q.

This is true at any Q

less than 15.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Does Eq’m Q Maximize Total Surplus?

The market

eq’m quantity maximizes

total surplus:

At any other quantity,

can increase

total surplus by moving

toward

the market eq’m quantity.

تزيد كمية توازن السوق من الفائض في أي كمية أخرى ، يمكن : الكلي

زيادة الفائض الكلي عن طريق التحرك .نحو كمية توازن السوق

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Adam Smith and the Invisible Hand

“Man has almost constant occasion for the help of his brethren, and it is

vain for him to expect it from their

benevolence only.

Adam Smith, 1723-1790

Passages from The Wealth of Nations, 1776

He will be more

likely to prevail if he can interest their

self-love in his favor, and show them

that it is for their own advantage to do

for him what he requires of them…

It is not from the benevolence of the

butcher, the brewer, or the baker that

we expect our dinner, but from their

regard to their own interest….

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Adam Smith and the Invisible Hand

“Every individual…neither intends to promote the public interest, nor knows

how much he is promoting it….

Adam Smith, 1723-1790

Passages from The Wealth of Nations, 1776

He intends only his own gain, and he is

in this, as in many other cases, led by

an invisible hand to promote an end

which was no part of his intention.

Nor is it always the worse for the society

that it was no part of it. By pursuing his

own interest he frequently promotes

that of the society more effectually than

when he really intends to promote it.”

an invisible hand

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Free Market vs. Govt Intervention

▪ The market equilibrium is efficient. No other

outcome achieves higher total surplus.

▪ Govt cannot raise total surplus by changing the

market’s allocation of resources. ▪ Laissez faire )French for “allow them to do”(:

the notion that govt should not interfere with the

market.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Free Market vs. Central Planning

▪ Suppose resources were allocated not by the

market, but by a central planner who cares about

society’s well-being.

▪ To allocate resources efficiently and maximize total

surplus, the planner would need to know every

seller’s cost and every buyer’s WTP for every good in the entire economy.

▪ This is impossible, and why centrally-planned

economies are never very efficient.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ This chapter used welfare economics to

demonstrate one of the Ten Principles:

Markets are usually a good way to

organize economic activity.

▪ Important note:

We derived these lessons assuming

perfectly competitive markets.

▪ In other conditions we will study in later

chapters, the market may fail to allocate

resources efficiently…

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

CONCLUSION

▪ Such market failures occur when:

▪ a buyer or seller has market power—the ability to

affect the market price.

▪ transactions have side effects, called externalities, that affect bystanders. (example: pollution)

▪ We’ll use welfare economics to see how public policy may improve on the market outcome in such cases.

▪ Despite the possibility of market failure, the analysis in this chapter applies in many markets, and the

invisible hand remains extremely important.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The height of the D curve reflects the value of the

good to buyers—their willingness to pay for it.

• Consumer surplus is the difference between what

buyers are willing to pay for a good and what they

actually pay.

• On the graph, consumer surplus is the area

between P and the D curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The height of the S curve is sellers’ cost of producing the good. Sellers are willing to sell if

the price they get is at least as high as their cost.

• Producer surplus is the difference between what

sellers receive for a good and their cost of

producing it.

• On the graph, producer surplus is the area

between P and the S curve.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• To measure society’s well-being, we use

total surplus, the sum of consumer and producer

surplus.

• Efficiency means that total surplus is maximized,

that the goods are produced by sellers with

lowest cost, and that they are consumed by

buyers who most value them.

• Under perfect competition, the market outcome

is efficient. Altering it would reduce total surplus.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Application:

The Costs of Taxation Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• How does a tax affect consumer surplus,

producer surplus, and total surplus?

• What is the deadweight loss of a tax?

• What factors determine the size of this

deadweight loss?

• How does tax revenue depend on the size of the

tax?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Review from Chapter 6

▪ A tax

▪ drives a wedge between the price buyers pay

and the price sellers receive.

▪ raises the price buyers pay and lowers the price

sellers receive.

▪ reduces the quantity bought & sold.

▪ These effects are the same whether the tax is

imposed on buyers or sellers, so we do not

make this distinction in this chapter.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax P

Eq’m with no tax: Price = PE

Quantity = QE

Eq’m with tax = $T per unit:

Sellers receive PS

Quantity = QT

Buyers pay PB

Size of tax = $T

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax P

Revenue from tax: $T x QT

QE QT

Size of tax = $T

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax

▪ Next, we apply welfare economics to measure the gains and losses

from a tax. ▪ .بعد ذلك ، نطبق اقتصاديات الرفاهية لقياس المكاسب والخسائر من الضريبة

▪ We determine consumer surplus (CS), producer surplus (PS), tax revenue, and total surplus with and without the tax.

▪ .نحدد فائض المستهلك وفائض المنتج واإليرادات الضريبية والفائض اإلجمالي مع أو بدون الضريبة

▪ Tax revenue can fund beneficial services (e.g., education, roads, police),

so we include it in total surplus.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax P

Without a tax,

QE QT

B C

D E

CS = A + B + C

PS = D + E + F

Tax revenue = 0

Total surplus = CS + PS

= A + B + C

+ D + E + F

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax P

QE QT

B C

D E

CS = A

PS = F

Tax revenue = B + D

Total surplus = A + B

+ D + F

With the tax,

The tax reduces total surplus by

C + E

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of a Tax P

QE QT

B C

D E

C + E is called the

deadweight loss (DWL) of the tax, the fall in total

surplus that

results from a market distortion, such as a tax.

تسمى سي و اي خسارة المكاسب القصوى للضريبه وهبوط إجمالي الفائض الناتج عن .تشويه السوق ، مثل الضريبة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

About the Deadweight Loss P

QE QT

Because of the tax, the units

between

QT and QE are not sold.

The value of these units to

buyers is greater than the cost

of producing them,

so the tax prevents some

mutually beneficial trades.

بينبسبب الضريبة ، ال يتم بيع الوحدات

Qt & Qe

قيمة هذه الوحدات للمشترين أكبر من تكلفة ،إنتاجها

بحيث تمنع الضريبة بعض الصفقات ذات .المنفعة المتبادلة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1مهم جدا

Analysis of tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A. Compute

CS, PS, and

total surplus

without a tax.

B. If $100 tax

per ticket,

compute

CS, PS,

tax revenue,

total surplus,

and DWL.

The market for airplane tickets

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers to A

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

= ½ x $200 x 100

= $10,000

Total surplus

= $10,000 + $10,000

= $20,000

= ½ x $200 x 100

= $10,000

P =

The market for airplane tickets

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1

Answers to B

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

= ½ x $150 x 75

= $5,625

Total surplus = $18,750

PS = $5,625

Tax revenue

= $100 x 75

= $7,500

DWL = $1,250

PS =

PB =

A $100 tax on airplane tickets

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What Determines the Size of the DWL? ما الذي يحدد حجم الخسارة النهائية؟

▪ Which goods or services should govt tax

to raise the revenue it needs?

▪ One answer: those with the smallest DWL.

▪ When is the DWL small vs. large?

Turns out it depends on the price elasticities

of supply and demand.

▪ Recall: The price elasticity of demand (or supply) measures how much QD

(or QS) changes when P changes.

▪ .عندما يتغير السعر( أو الكمية)مدى تغير الطلب على الكمية ( أو العرض)تقيس مرونة الطلب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

When supply

is inelastic,

it’s harder for firms to leave the market when the tax

reduces PS.

So, the tax only reduces Q

a little,

and DWL is small.

عندما يكون العرض غير مرن ،

يصعب على الشركات مغادرة السوق الضريبه بي اسعندما تخفض

لذا ، فإن الضريبة فقط تخفض الكمية .قليالً ، وفقدان الوزن النهائي صغير

DWL and the Elasticity of Supply

Size of tax

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

DWL and the Elasticity of Supply

Size of tax

The more elastic is supply,

the easier for firms

to leave the market when the

tax reduces PS,

the greater Q falls below the

surplus-maximizing quantity,

the greater the DWL.

كلما زادت مرونة العرض ،

األسهل للشركات أن تغادر السوق عندما الضريبه بي استخفض

كلما انخفضت الكمية إلى أقل من كمية الفائض إلى أقصى حد ،

فإن فقدان المكاسب أكبر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

DWL and the Elasticity of Demand

Size of tax

When demand

is inelastic,

it’s harder for consumers to leave the market when

the tax raises PB.

So, the tax only reduces

Q a little,

and DWL is small.

عندما يكون الطلب غير مرن ،

يصعب على المستهلكين مغادرة السوق من البي بيعندما تزيد الضرائب

، لذا ، فإن الضريبة فقط تقلل الكمية قليالً وخسارة المكاسب تكون صغيره

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

DWL and the Elasticity of Demand

Size of tax

The more elastic is demand,

the easier for buyers to

leave the market when the

tax increases PB,

the more Q falls below the

surplus-maximizing quantity,

and the greater the DWL.

أكثر مرونة هو الطلب ،

األسهل للمشترين لمغادرة السوق عندما بي بيتزيد الضريبة

كلما انخفضت الكمية إلى أقل من كمية ، كلما زادت الفائض إلى أقصى حد

خسارة المكاسب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Elasticity and the DWL of a tax

Would the DWL of a tax be larger if the

tax were on: DWLهل سيكون مبلغ

:الضريبي أكبر إذا كانت الضريبة

a. Breakfast cereal or sunscreen?

A. ؟حبوب اإلفطار أو واقية من الشمس

B. Hotel rooms in the short run or hotel rooms in

the long run? B. ؟غرف الفنادق في المدى القصير أو غرف الفنادق على المدى الطويل

C. Groceries or meals at fancy restaurants? C. البقالة أو وجبات الطعام في المطاعم الفاخرة؟

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

A. Breakfast cereal or sunscreen

From Chapter 5:

Breakfast cereal has more close substitutes than sunscreen, so

demand for breakfast cereal is more price-elastic than demand for sunscreen.

So, a tax on breakfast cereal would cause a larger DWL than a tax

on sunscreen.

تحتوي حبوب اإلفطار على بدائل أكثر قربًا من مستحضرات الحماية من الشمس ، لذلك فإن الطلب على حبوب

.يكون أكثر مرونة من السعر المطلوب من الشمساإلفطار

على الضريبة أكبر من فقدان مكاسب لذا ، فإن فرض ضريبة على حبوب اإلفطار من شأنه أن يتسبب في وجود واقي الشمس

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

B. Hotel rooms in the short run or long run

From Chapter 5:

The price elasticities of demand and supply

for hotel rooms are larger in the long run than in the short run.

So, a tax on hotel rooms would cause a larger DWL in the long run

than in the short run.

.تعتبر المرونة السعرية للطلب والعرض لغرف الفنادق أكبر على المدى الطويل من المدى القصير

لذا ، فإن فرض ضريبة على غرف الفنادق قد يتسبب في وجود فقدان مكاسب اكبر على المدى الطويل .من المدى القصير

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 2

Answers

C. Groceries or meals at fancy restaurants

From Chapter 5:

Groceries are more of a necessity and therefore less price-elastic

than meals at fancy restaurants.

So, a tax on restaurant meals would cause a larger DWL than a tax

on groceries.

.البقالة هي أكثر من ضرورة ، وبالتالي أقل مرونة السعر من وجبات الطعام في المطاعم الفاخرة

من الضريبة مكاسب أكبر لذا ، فإن فرض ضريبة على وجبات المطاعم قد يتسبب في وجود فقدان .المفروضة على محالت البقالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 3

Discussion question

▪ The government must raise tax revenue to pay

for schools, police, etc. To do this, it can either

tax groceries or meals at fancy restaurants.

▪ Which should it tax?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be? يجب أن تكون الحكومة كبيرة؟كيف

▪ A bigger government provides more services, but requires higher

taxes, which cause DWLs. ▪ أعلى مما يؤدي الى فقدان المكاسب األكبر توفر خدمات اكثر ولكنها تتطلب ضرائب الحكومه

▪ The larger the DWL from taxation, the greater the argument for

smaller government.

▪ زادت حجة الحكومه األصغر حجما, كلما زاد حجم الضريبه من الضرائب

▪ The tax on labor income is especially important; it’s the biggest source of govt revenue.

▪ أنها اكبر مصدر اليرادات الحكومه, تكتسب الضريبه على دخل العماله أهمية خاصه

▪ For the typical worker, the marginal tax rate (the tax on the last dollar

of earnings) is about 40%.

▪ حولي ( الضريبه على اخر دوالر من األرباح)فإن معدل الضريبه الحديه, بالنسبه للعامل النموذجي 40%

▪ How big is the DWL from this tax? It depends on elasticity ماهو حجم خسارة المكاسب ذلك يعتمد على المرونه, من الضريبه

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be?

▪ If labor supply is inelastic, then this DWL is

small.

▪ فقدان حجم المكاسب صغيرإذا كان عرض العمل غير مرن ، فإن

▪ Some economists believe labor supply is

inelastic, arguing that most workers work

full-time regardless of the wage.

▪ يعتقد بعض االقتصاديين أن العرض العمالي غير مرن ، بحجة أن .معظم العمال يعملون بدوام كامل بغض النظر عن األجر

▪

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Big Should the Government Be?

Other economists believe labor taxes are highly distorting because

some groups of workers have elastic supply and can respond to incentives:

▪ Many workers can adjust their hours, e.g., by working overtime.

▪ .يمكن للعديد من العمال تعديل ساعات عملهم ، على سبيل المثال ، عن طريق العمل اإلضافي

▪ Many families have a 2nd earner with discretion over whether and

how much to work.

▪ .تمتلك العديد من العائالت ربًحا ثانيًا حسب تقديرها ومدى عملها

▪ Many elderly choose when to retire based on the wage they earn. ▪ يختار العديد من كبار السن وقت التقاعد بناًء على األجر الذي يكسبونه

▪ Some people work in the “underground economy” to evade high taxes. للتهرب من الضرائب المرتفعة" االقتصاد السري"يعمل بعض الناس في

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effects of Changing the Size of the Tax آثار تغيير حجم الضريبة

▪ Policymakers often change taxes, raising some and

lowering others.

▪ غالباً ما يغير صانعو السياسة الضرائب ويثيرون البعض ويخفضون اآلخرين

▪ What happens to DWL and tax revenue when

taxes change? We explore this next…. ▪ ماذا يحدث لفقدان حجم المكاسب وايراد الضرائب عند تغيير

الضرائب؟ نكتشفها الحقا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Q2 Q1

DWL and the Size of the Tax

causes the DWL to

more than double. اساب فقد حجم المكاسب الى اكثر من الضعب

Doubling the tax

مضاعفة الضريبه

2T T

Initially, the tax is T per

unit.

في البدايه في الضريبه هي تي لكل وحده

initial DWL

new DWL

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

DWL and the Size of the Tax

3T T

causes the DWL to

more than triple. اسباب فقد حجم المكاسب الى اكثر من

اضعاف 3

Tripling the tax

مرات 3مضاعفة الضريبه

Initially, the tax is T per unit.

initial DWL

new DWL

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

DWL and the Size of the Tax

DWL

Tax size

Summary

When a tax increases,

DWL rises even more.

عندما تزيد الضرائب ترتفع فقدان حجم المكاسب اكثر

Implication

When tax rates are low, raising

them doesn’t cause much harm, and lowering them doesn’t bring much benefit.

When tax rates are high, raising

them is very harmful, and

cutting them is very beneficial.

عندما تكون معدالت الضرائب منخفضة ، فإن رفعها ال يسبب الكثير من الضرر ، وال يؤدي

.خفضها إلى تحقيق فائدة كبيرة

عندما تكون المعدالت الضريبية عالية ، فإن .رفعها ضار للغاية ، وقطعها أمر مفيد للغاية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Revenue and the Size of the Tax

2T T

When the

tax is small, increasing it causes

tax revenue to rise.

عندما تكون الضريبة صغيرة ، فإن زيادة هذا األمر تؤدي .إلى ارتفاع عائدات الضرائب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Revenue and the Size of the Tax

3T 2T When the

tax is larger, increasing it causes

tax revenue to fall.

أكبر " الضريبة"عندما تكون ، فإن زيادة ذلك تؤدي إلى .انخفاض إيرادات الضرائب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Laffer curve shows the

relationship

between the size of the tax

and tax revenue.

الفر العالقة يظهرمنحنى بين حجم الضريبة واإليرادات الضريبية

Revenue and the Size of the Tax

Tax size

Tax revenue

The Laffer curve

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A tax on a good reduces the welfare of buyers and sellers. This

التي ترفعها الضرائب على الحكومة

• The fall in total surplus (consumer surplus, producer surplus, and tax

revenue) is called the deadweight loss (DWL) of the tax.

• A tax has a DWL because it causes consumers to buy less and producers

to sell less, thus shrinking the market below the level that maximizes total

surplus.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• The price elasticities of demand and supply measure how much

buyers and sellers respond to price changes. Therefore, higher elasticities imply higher DWLs.

• An increase in the size of a tax causes the DWL to rise even more.

• ارتفاع فقدان حجم مكاسب اكثرزيادة في حجم الضريبة يؤدي إلى

• An increase in the size of a tax causes revenue to rise at first, but

eventually revenue falls because the tax reduces the size of the

market.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Application:

International Trade Premium

PowerPoint

Slides by

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

N. Gregory Mankiw

Macroeconomics Principles of

Sixth Edition

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In this chapter,

look for the answers to these questions:

• What determines how much of a good a country

will import or export?

• Who benefits from trade? Who does trade

harm? Do the gains outweigh the losses?

• If policymakers restrict imports, who benefits?

Who is harmed? Do the gains from restricting

imports outweigh the losses?

• What are some common arguments for

restricting trade? Do they have merit?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Introduction

▪ Recall from Chapter 3: A country has a comparative advantage in a good if it produces the

good at lower opportunity cost than other countries.

Countries can gain from trade if each exports the goods in which it has a comparative advantage.

.يتمتع البلد بميزة نسبية في حالة جيدة إذا كان ينتج السلعة بتكلفة فرصة أقل من البلدان األخرى

.يمكن للبلدان أن تستفيد من التجارة إذا كان كل منها يصدر البضائع التي يتمتع فيها بميزة نسبية

▪ Now we apply the tools of welfare economics

to see where these gains come from and

who gets them.

▪ .اآلن نطبق أدوات اقتصاديات الرفاه لنرى من أين تأتي هذه المكاسب ومن الذي يحصل عليها

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The World Price and Comparative Advantageمهم

▪ PW = the world price of a good, the price that prevails in world

markets ▪ العالميةالسعر الذي يسود في األسواق للسلعه، السعر العالمي

▪ PD = domestic price without trade

▪ If PD < PW,

▪ country has comparative advantage in the good

▪ under free trade, country exports the good

▪ السلعهبلد له ميزة نسبية في

▪ تصدر البالد السلعهفي ظل التجارة الحرة ،

▪ If PD > PW,

▪ country does not have comparative advantage

▪ under free trade, country imports the good

▪ ال تملك الدولة ميزة نسبية

▪ السلعهفي ظل التجارة الحرة ، تستورد البالد

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Small Economy Assumptionافتراض االقتصاد الصغير ▪ A small economy is a price taker in world markets: Its actions have

no effect on PW. ▪ السعر العالميال تؤثر أفعاله على : االقتصاد الصغير هو من يقوم على األسعار في األسواق العالمية

▪ Not always true—especially for the U.S.—but simplifies the analysis without

changing its lessons.

▪ .ولكنه يبّسط التحليل دون تغيير دروسه —خاصةً بالنسبة للواليات المتحدة —ليس صحيًحا دائًما

▪ When a small economy engages in free trade, PW is the only relevant

price: ، يكون السعر العالمي هو السعر الوحيد المناسبعندما ينخرط اقتصاد صغير في التجارة الحرة

▪ No seller would accept less than PW, sinceshe could sell the good

for PW in world markets.

▪ السلعة للسعر العالمي في األسواق العالميهيقبل أي بائع أقل من السعر العالمي حيث يمكنها بيع لن

▪ No buyer would pay more than PW, since he could buy the good

for PW in world markets. ▪ لن يدفع أي مشتٍر أكثر من السعر العالمي ، ألنه يمكن أن يشتري سلعة مقابل األسعار العالمية في

األسواق العالمية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Country That Exports Soybeans Without trade,

PD = $4

Q = 500

PW = $6

Under free trade,

▪ domestic

consumers

demand 300

▪ domestic producers

supply 750

▪ exports = 450

500 300

Soybeans

exports

750

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Country That Exports Soybeans Without trade,

CS = A + B

PS = C

Total surplus

= A + B + C

With trade,

CS = A

PS = B + C + D

Total surplus

= A + B + C + D

Soybeans

exports A

B D

C gains

from trade

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Without trade, PD = $3000, Q = 400

In world markets,

PW = $1500

Under free trade,

how many TVs

will the country import or export?

Identify CS, PS, and

total surplus without

trade, and with trade.

$1500

200

$3000

400 600

Plasma TVs

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ACTIVE LEARNING 1مهم

Analysis of trade

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Under free trade,

▪ domestic consumers

demand 600

▪ domestic

producers

supply 200

▪ imports = 400

$1500

200

$3000

600

Plasma TVs

imports

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Without trade,

CS = A

PS = B + C

Total surplus

= A + B + C

With trade,

CS = A + B + D

PS = C

Total surplus

= A + B + C + D

$1500

$3000

Plasma TVs

B D

gains from trade

imports

ACTIVE LEARNING 1

Answers

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

total surplus

producer surplus

consumer surplus

direction of trade

rises

falls

rises

imports

PD > PW

rises

falls

exports

PD < PW

Summary: The Welfare Effects of Trade

Whether a good is imported or exported, trade creates winners

and losers. But the gains exceed the losses.

.سواء تم استيراد السلعة أو تصديرها ، فإن التجارة تخلق الرابحين والخاسرين

.لكن المكاسب تتجاوز الخسائر

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Other Benefits of International Trade فوائد أخرى للتجارة الدولية

▪ Consumers enjoy increased variety of goods. ▪ .يتمتع المستهلكون بتنوع متزايد في البضائع

▪ Producers sell to a larger market, may achieve lower costs by

producing on a larger scale.

▪ .قد يبيع المنتجون إلى سوق أكبر ، وقد يحققون تكاليف أقل من خالل اإلنتاج على نطاق أوسع

▪ Competition from abroad may reduce market power of domestic

firms, which would increase

total welfare.

▪ .قد تقلل المنافسة من الخارج من قوة السوق في الشركات المحلية ، مما يزيد من الرفاهية اإلجمالية

▪ Trade enhances the flow of ideas, facilitates the spread of technology around the world.

▪ .تعزز التجارة تدفق األفكار وتسهل انتشار التكنولوجيا حول العالم

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Then Why All the Opposition to Trade? إذن لماذا كل المعارضة للتداول؟ ▪ Recall one of the Ten Principles from Chapter 1:

Trade can make everyone better off.

▪ The winners from trade could compensate the losers and still be better off.

▪ .يمكن للفائزين من التجارة تعويض الخاسرين وما زالوا أفضل حاالً

▪ Yet, such compensation rarely occurs.

▪ .ومع ذلك ، نادرا ما يحدث مثل هذا التعويض

▪ The losses are often highly concentrated among a small group of people,

who feel them acutely.

▪ .غالبا ما تتركز الخسائر بشكل كبير بين مجموعة صغيرة من الناس ، الذين يشعرون بها بشكل حاد

The gains are often spread thinly over many people, who may not see how

trade benefits them.

.وكثيرا ما تنتشر المكاسب بشكل ضعيف على العديد من الناس ، الذين قد ال يرون كيف تفيدهم التجارة

▪ Hence, the losers have more incentive to organize and lobby for restrictions

on trade.

▪ .ومن ثم ، يكون لدى الخاسرين حافز أكبر للتنظيم والضغط من أجل فرض قيود على التجارة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Tariff: An Example of a Trade Restriction مثال على تقييد التجارة: التعرفة

▪ Tariff: a tax on imports ضريبه على الواردات

▪ Example: Cotton shirts

PW = $20

Tariff: T = $10/shirt Consumers must pay $30 for an imported shirt.

So, domestic producers can charge $30 per shirt.

▪ In general, the price facing domestic buyers & sellers equals (PW + T

▪ .دوالًرا للقميص المستورد 30يجب أن يدفع المستهلكون

▪ .دوالًرا أمريكيًا على كل قميص 30لذلك ، يمكن للمنتجين المحليين فرض

▪ Pw+T عام ، السعر الذي يواجه المشترين والبائعين المحليين يساويبشكل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

$30

Analysis of a Tariff on Cotton Shirts

PW = $20

Free trade:

buyers demand 80

sellers supply 25

imports = 55

T = $10/shirt

price rises to $30

buyers demand 70

sellers supply 40

imports = 30

$20

Cotton shirts

40 70 80

imports imports

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

$30

Analysis of a Tariff on Cotton Shirts

Free trade

CS = A + B + C

+ D + E + F

PS = G

Total surplus = A + B

+ C + D + E + F + G

Tariff

CS = A + B

PS = C + G

Revenue = E

Total surplus = A + B

+ C + E + G

$20

Cotton shirts

D E

G F C

70 80

deadweight loss = D + F

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

$30

Analysis of a Tariff on Cotton Shirts

D = deadweight loss from the

overproduction

of shirts

F = deadweight loss

from the under-

consumption

of shirts

$20

Cotton shirts

D E

G F C

70 80

deadweight loss = D + F

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Import Quotas: Another Way to Restrict Trade

▪ An import quota is a quantitative limit on imports of a good. ▪ ةالسلعتمثل حصة االستيراد حًدا كميًا لواردات

▪ Mostly has the same effects as a tariff:

▪ Raises price, reduces quantity of imports.

▪ Reduces buyers’ welfare. ▪ Increases sellers’ welfare.

▪ :في الغالب لها نفس آثار التعريفة الجمركية

▪ .يرفع السعر ، ويقلل من كمية الواردات

▪ .يقلل من رفاهية المشترين

▪ .يزيد رفاهية البائعين

▪ A tariff creates revenue for the govt. A quota creates profits for the foreign

producers of the imported goods, who can sell them at higher price. ▪ تنتج الحصة أرباحاً للمنتجين األجانب للسلع المستوردة ، الذين يمكنهم بيعها . تعرفة تخلق إيرادات للحكومة

أعلىبسعر

▪ Or, govt could auction licenses to import to capture this profit as revenue.

Usually it does not. أو يمكن للحكومة أن تحصل على تراخيص مزادات الستيراد هذه األرباح عادة ال يفعل ذلك. كإيرادات

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Tradeالحجج لتقييد التجارة

1. The jobs argument

Trade destroys jobs in industries that compete with imports.

حجة الوظائف.

.التجارة تدمر الوظائف في الصناعات التي تتنافس مع الواردات

Economists’ response: Look at the data to see whether rising imports cause rising

unemployment…

:استجابة االقتصاديين

...انظر إلى البيانات لمعرفة ما إذا كان ارتفاع الواردات يسبب ارتفاع معدالت البطالة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

U.S. Imports & Unemployment, Decade averages, 1961–2010

1 9 6 1 -

1 9 7 0

1 9 7 1 -

1 9 8 0

1 9 8 1 -

1 9 9 0

1 9 9 1 -

2 0 0 0

2 0 0 1 -

2 0 1 0

Imports

(% of GDP)

Unemployment

(% of labor force)

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

1. The jobs argument

Trade destroys jobs in the industries that compete against imports.

.التجارة تدمر الوظائف في الصناعات التي تنافس الواردات

Economists’ response:

Total unemployment does not rise as imports rise, because job losses from imports are offset by job gains in export industries.

Even if all goods could be produced more cheaply abroad, the country need only have a comparative advantage to have a viable export industry and to gain from trade.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

2. The national security argument

An industry vital to national security should be protected from foreign competition, to prevent dependence on imports that could

be disrupted during wartime.

حجة األمن القومي

Economists’ response: Fine, as long as we base policy on true security needs.

But producers may exaggerate their own importance to national

security to obtain protection from foreign competition.

.جيًدا ، طالما أننا نؤسس السياسة على احتياجات األمان الحقيقية

لكن المنتجين قد يبالغون في أهميتهم الخاصة لألمن القومي للحصول على الحماية من المنافسة .األجنبية

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

3. The infant-industry argument

A new industry argues for temporary protection until it is mature and can compete with foreign firms.

حجة صناعة الرضع

.تدافع صناعة جديدة عن الحماية المؤقتة إلى أن تصبح ناضجة ويمكنها التنافس مع الشركات األجنبية

Economists’ response: Difficult for govt to determine which industries

will eventually be able to compete and whether benefits of establishing

these industries exceed cost to consumers of restricting imports.

Besides, if a firm will be profitable in the long run,

it should be willing to incur temporary losses.

:رد االقتصاديين

إلى جانب ذلك ، إذا كانت الشركة رابحة على المدى الطويل ، فيجب أن تكون على استعداد لتحمل خسائر مؤقتة

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

4. The unfair-competition argument

Producers argue their competitors in another country have an unfair advantage, e.g. due to govt subsidies.

حجة المنافسة غير العادلة

يجادل المنتجون بأن منافسيهم في بلد آخر لهم ميزة غير عادلة ، على سبيل المثال ، بسبب دعم .الحكومة

Economists’ response: Great! Then we can import extra-cheap products subsidized by the

other country’s taxpayers. The gains to our consumers will exceed the losses to our

producers.

:رد االقتصاديين

.ثم يمكننا استيراد منتجات رخيصة الثمن مدعومة من دافعي الضرائب في البالد األخرى! عظيم

.سوف تتجاوز المكاسب التي يتحملها المستهلكون الخسائر التي يتعرض لها منتجونا

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Arguments for Restricting Trade

5. The protection-as-bargaining-chip argument

Example: The U.S. can threaten to limit imports of French wine unless France lifts their quotas on American beef.

مساومة الرقاقةحجة الحماية ، كما

Economists’ response: Suppose France refuses. Then the U.S. must choose between two bad

options:

A) Restrict imports from France, which reduces welfare in the U.S.

B) Don’t restrict imports, which reduces U.S. credibility.

:رد االقتصاديين

:بعد ذلك ، يجب على الواليات المتحدة االختيار بين خيارين سيئين. فرنسارفضت لنفترض

.تقييد الواردات من فرنسا ، مما يقلل من الرفاهية في الواليات المتحدة( أ

.ال تقيد االستيراد ، مما يقلل من مصداقية الواليات المتحدة( ب

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Trade Agreementsاتفاقيات تجارية

▪ A country can liberalize trade with

▪ unilateral reductions in trade restrictions

▪ multilateral agreements with other nations

▪ يمكن لبلد تحرير التجارة مع ▪ تخفيضات من جانب واحد في القيود التجارية

▪ اتفاقات متعددة األطراف مع الدول األخرى

▪ Examples of trade agreements:

▪ North American Free Trade Agreement (NAFTA), 1993

▪ General Agreement on Tariffs and Trade (GATT), ongoing

▪ World Trade Organization (WTO), est. 1995, enforces trade agreements, resolves disputes

▪ :أمثلة على االتفاقيات التجارية

▪ 1993، ( نافتا)اتفاقية التجارة الحرة ألميركا الشمالية

▪ ، جارية( الجات)اتفاقية عامة بشأن التعريفات الجمركية والتجارة

▪ )منظمة التجارة العالمية WTO) ، تفرض االتفاقيات التجارية ، تحل النزاعات 1995عام ،

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• A country will export a good if the world price of the good is higher

than the domestic price without trade. Trade raises producer surplus, reduces consumer surplus, and raises total surplus.

• A country will import a good if the world price

is lower than the domestic price without trade.

Trade lowers producer surplus but raises consumer and total surplus.

• A tariff benefits producers and generates revenue for the govt, but

the losses to consumers exceed these gains.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

SUMMARY

• Common arguments for restricting trade include: protecting jobs,

defending national security, helping infant industries, preventing unfair competition, and responding to foreign trade restrictions.

• Some of these arguments have merit in some cases, but

economists believe free trade is usually the better policy.

• بعض هذه الحجج لها ميزة في بعض الحاالت ، ولكن يعتقد االقتصاديون أن التجارة الحرة هي .عادة السياسة األفضل

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Country That Imports Plasma TVs

Without trade,

PD = $3000

Q = 400

PW = $1500

Under free trade,

▪ domestic

consumers

demand 600

▪ domestic producers

supply 200

▪ imports = 400

$1500

200

$3000

400 600

Plasma TVs

imports

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Country That Imports Plasma TVs

Without trade,

CS = A

PS = B + C

Total surplus

= A + B + C

With trade,

CS = A + B + D

PS = C

Total surplus

= A + B + C + D

$1500

$3000

Plasma TVs

B D

gains from trade

imports

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

On 12/31/2004, U.S. quotas on

apparel & textile

products expired.

During Jan 2005:

▪ U.S. imports of these

products from China

increased over 70%.

▪ Loss of 12,000 jobs in U.S. textile industry.

The U.S. textile industry & labor unions fought for

new trade restrictions.

The National Retail

Federation opposed any

restrictions.

In the News: Textile Imports from China

November 2005: Bush administration agreed

to limit growth in imports

from China.

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Measuring a Nation’s Income Premium