demanded
... there were a very popular toy that all the kids wanted around Christmas time, but not enough were made to meet the high demand, what would probably happen? How much would people likely pay? Why? ...
... there were a very popular toy that all the kids wanted around Christmas time, but not enough were made to meet the high demand, what would probably happen? How much would people likely pay? Why? ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... borrow in bad times. Since these are also times in which revenue falls (revenue is procyclical both in industrial countries and in Latin America, but somewhat more so in the latter), Latin American governments are forced to curtail their expenditures at the very time that (from a Keynesian perspecti ...
... borrow in bad times. Since these are also times in which revenue falls (revenue is procyclical both in industrial countries and in Latin America, but somewhat more so in the latter), Latin American governments are forced to curtail their expenditures at the very time that (from a Keynesian perspecti ...
History of Economics
... • Friedman brought market oriented thinking and economic freedom into public discourse – He believed that the system of fixed exchange rates would not work. And twenty years later it collapsed. – In 1952 he argued for an all volunteer army, which was later adopted. – He argued for school vouchers in ...
... • Friedman brought market oriented thinking and economic freedom into public discourse – He believed that the system of fixed exchange rates would not work. And twenty years later it collapsed. – In 1952 he argued for an all volunteer army, which was later adopted. – He argued for school vouchers in ...
Milton Friedman and the Chicago School of Economics
... Stigler helped to do the same in microeconomics. Friedman challenged the dominance of Keynesian economics in the postwar period, and Stigler’s writings undermined many of the rationales for government regulation of business. Their common method of analysis, which became a near hallmark of the Chicag ...
... Stigler helped to do the same in microeconomics. Friedman challenged the dominance of Keynesian economics in the postwar period, and Stigler’s writings undermined many of the rationales for government regulation of business. Their common method of analysis, which became a near hallmark of the Chicag ...
Fiscal and Monetary Policy
... Government can use expansionary fiscal policy to decrease the unemployment rate. This is how it works: • A high unemployment rate is the result of people not spending enough money in the economy. • If the government increases spending or reduces taxes, or both, consumers will have more money to spen ...
... Government can use expansionary fiscal policy to decrease the unemployment rate. This is how it works: • A high unemployment rate is the result of people not spending enough money in the economy. • If the government increases spending or reduces taxes, or both, consumers will have more money to spen ...
History of macroeconomic thought
Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not have an impact on real factors such as real output. John Maynard Keynes attacked some of these ""classical"" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle. The word macroeconomics was first used by Ragnar FrischThe generation of economists that followed Keynes synthesized his theory with neoclassical microeconomics to form the neoclassical synthesis. Although Keynesian theory originally omitted an explanation of price levels and inflation, later Keynesians adopted the Phillips curve to model price-level changes. Some Keynesians opposed the synthesis method of combining Keynes's theory with an equilibrium system and advocated disequilibrium models instead. Monetarists, led by Milton Friedman, adopted some Keynesian ideas, such as the importance of the demand for money, but argued that Keynesians ignored the role of money supply in inflation. Robert Lucas and other new classical macroeconomists criticized Keynesian models that did not work under rational expectations. Lucas also argued that Keynesian empirical models would not be as stable as models based on microeconomic foundations.The new classical school culminated in real business cycle theory (RBC). Like early classical economic models, RBC models assumed that markets clear and that business cycles are driven by changes in technology and supply, not demand. New Keynesians tried to address many of the criticisms leveled by Lucas and other new classical economists against Neo-Keynesians. New Keynesians adopted rational expectations and built models with microfoundations of sticky prices that suggested recessions could still be explained by demand factors because rigidities stop prices from falling to a market-clearing level, leaving a surplus of goods and labor. The new neoclassical synthesis combined elements of both new classical and new Keynesian macroeconomics into a consensus. Other economists avoided the new classical and new Keynesian debate on short-term dynamics and developed the new growth theories of long-run economic growth. The Great Recession led to a retrospective on the state of the field and some popular attention turned toward heterodox economics.