Learning Basic Macroeconomics

Hal W. Snarr

• Publisher: Business Expert Press
• Year: 2014
• ISBN:
  9781606495315
• Topic: Economics
• Subtopic: Macroeconomics
• Index: Economics

Traditional macroeconomic principles textbooks are theoretically based, and require students to apply definitions, analyze charts, graphs and tables, and use logic and reasoning skills to evaluate the effects of economic shocks or policy changes. Recognizing how challenging this is, economics instruction has adopted video, simulation, and other methods to aid in learning. These methods, however, while possibly stimulating students' imagination, may also stifle it and contribute to a dependent learning style. It may also fail to connect topics and models in cohesive and meaningful ways. This book presents macroeconomic principles in a logical and concise order, and uses the Maple© mathematics program to build and analyze macroeconomic models. The method outlined in this book teaches readers with basic algebraic skill levels how to build a model of the macro-economy from the ground up. The method uses models derived from typical principles textbooks using Maple as a platform. Maple's interface is as easy to use as typing a simple math problem in Microsoft Word using keys on a standard keyboard. The Maple syntax is kept simple, which allows readers to be proficient in Maple in a matter of minutes. In short, this book allows executives, advanced degree students, undergraduate students, business executives, managers, policy makers, and others to gain a fuller understanding of how the macro-economy works. Topics covered in the book range from individual demand and firm supply to aggregate demand and supply, and fiscal and monetary policy from the Austrian to Keynesian schools of thought.

CHAPTER 1

How to Use MAPLE

MAPLE is a powerful computer algebra system, developed and sold by Maplesoft, that is used in this book to build, graph, and analyze a mathematical model of the macroeconomy, known as the aggregate market model. The program is ideally suited for this because it allows users to assemble and systematically combine the various models that form the aggregate market model, frees users from doing tedious calculations and algebraic manipulations, and is nearly as easy to use as Microsoft Word. Without MAPLE, the modeling that is performed in this book would be difficult for those who struggle with mathematics. Once basic MAPLE syntax is understood, which is the focus of this chapter; readers will find using the program to perform the modeling in this book to be an effective and perhaps fun way to learn macroeconomics.

After opening MAPLE, users will see the image in Figure 1.1 displayed on the desktop of their computers. To begin doing math, click CLOSE in the bottom right-hand corner of the small STARTUP window that appears in the large dark gray area of the MAPLE window. This reveals the QUICK HELP window, which closes automatically if any number or letter is pressed on the keyboard. In Figure 1.2a, the number 5 key was pressed to close this window. When the ENTER key is pressed after number 5 is typed, MAPLE outputs the number in the center of the white page, and labels it, (1), in the right-hand margin. MAPLE displays input using black font, but uses blue font for output.

Figure 1.1 Launching MAPLE 18

Figure 1.2 Getting started in MAPLE 18

Figure 1.2b shows how a set of consecutive mathematical calculations are carried out in and displayed by MAPLE. The second input line asks MAPLE to add 5 and 3. Its output, 8, is labeled, (2). The third input line asks MAPLE to multiply 4 and 5. Although MAPLE displays the multiplication symbol as a dot between the two numbers, the operation is typed as 4*5. Once the asterisk is typed, MAPLE automatically replaces it with a dot. The final input lines ask MAPLE to divide 4 by 8. Once the forward slash is typed, MAPLE displays it as a division line directly below 4 in both input lines. MAPLE reduces 4/8 to 1/2 in output, (4). In output (5), the answer is reported as 0.5000000000 because a decimal point was placed after 4 in the input line.

For the sake of brevity, this book will not display screenshots of MAPLE. In addition, rather than presenting how MAPLE displays typed input, this book will show how input is typed into MAPLE. For example, the input commands and their respective outputs that are shown in Figure 1.2b will be displayed in this book as follows.

5

5

5+3

8

4*5

20

4/8

4./8

0.5

Graphing a line in MAPLE is straightforward. If the slope is 4 and the intercept is 8, pressing the ENTER key after typing the following defines an unnamed linear function.

4*x+8

4 x + 8

MAPLE’s ditto operator, %, is the temporary name for the previous output. Its usefulness is demonstrated in the following exhibit.

%

4 x + 8

Thus, % is equivalent to the ANS function on a TI-83 calculator.¹ Ditto operator % is used again in the following plot command to graph 4x + 8.²

plot(%,x=0..4,0..25)

The aforementioned command plots whatever % is currently defined to be, 4x + 8 in this case, over values of x, from 0 to 4, and y, from 0 to 25. The graph is the upward sloping line in Figure 1.3.

Figure 1.3 Graphing in MAPLE

Because % is the temporary name for the previous result, its use is limited if one wishes to graph multiple lines together. MAPLE’s assignment operator, a colon followed by the ...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Abstract
• Contents
• Acknowledgments
• Introduction
• Chapter 1 How to Use MAPLE
• Chapter 2 Foundations of Macroeconomics
• Chapter 3 Aggregate Expenditure
• Chapter 4 The Aggregate Market Model
• Chapter 5 Fiscal Policy
• Chapter 6 Monetary Policy
• Chapter 7 What Have We Learned?
• About the Author
• References
• Index
• Ad page
• Back cover