RBC and New Keynesian Models
... – A positive productivity shock, e.g., a new invention or government policy that makes the economy more efficient, causes the LRAS to shift to the right (while the AD curve remains the same), thus an increase in aggregate output YP and a decrease in the inflation rate π – A negative supply shock, e. ...
... – A positive productivity shock, e.g., a new invention or government policy that makes the economy more efficient, causes the LRAS to shift to the right (while the AD curve remains the same), thus an increase in aggregate output YP and a decrease in the inflation rate π – A negative supply shock, e. ...
Lecture 2: National Income Accounting
... The Potential GDP is the real output an economy can produce when it fully employs its available resources, i.e., at the natural rate of unemployment. “Natural” does not mean that the economy will always operate at this rate and thus realize its potential output. NRU can vary over time. In 1980 ...
... The Potential GDP is the real output an economy can produce when it fully employs its available resources, i.e., at the natural rate of unemployment. “Natural” does not mean that the economy will always operate at this rate and thus realize its potential output. NRU can vary over time. In 1980 ...
02- Unit Three Problem Sets
... a. Explain the difference between expansionary and contractionary fiscal policies. Explain their goals and give specific examples. ( ____/10) b. To support your answer in part a, draw a recessionary gap and an inflationary gap. Draw and explain how fiscal policy is used to close the gaps using accur ...
... a. Explain the difference between expansionary and contractionary fiscal policies. Explain their goals and give specific examples. ( ____/10) b. To support your answer in part a, draw a recessionary gap and an inflationary gap. Draw and explain how fiscal policy is used to close the gaps using accur ...
Chapter 17 - Aggregate Demand and Aggregate Supply
... When output is less than its full employment level wages will eventually fall • Causing a drop in price level and a rise in GDP until full employment is restored Lieberman & Hall; Introduction to Economics, 2005 ...
... When output is less than its full employment level wages will eventually fall • Causing a drop in price level and a rise in GDP until full employment is restored Lieberman & Hall; Introduction to Economics, 2005 ...
PPT
... occurred in the United States during the 1970s when the Fed responded to the OPEC oil price rise by increasing the quantity of money. © 2016 Pearson Addison-Wesley ...
... occurred in the United States during the 1970s when the Fed responded to the OPEC oil price rise by increasing the quantity of money. © 2016 Pearson Addison-Wesley ...
Inflation and deflation
... Cost-push inflation occurs as a result of an increase in the costs of production. As you know, an increase in costs results in a fall in short-run aggregate supply from SRAS1 to SRAS2. This results in an increase in the average price level and a fall in the level of real output. Cost-push inflation ...
... Cost-push inflation occurs as a result of an increase in the costs of production. As you know, an increase in costs results in a fall in short-run aggregate supply from SRAS1 to SRAS2. This results in an increase in the average price level and a fall in the level of real output. Cost-push inflation ...
Background Notes and Methodology - National Income and Expenditure (PDF 47KB)
... estimates are contained in this issue of “National Income and Expenditure” (NIE 2006). These estimates are based, not on exact information but on incomplete data collected from many sources. The estimates of different items are therefore of varying accuracy, but where exact statistics were not avail ...
... estimates are contained in this issue of “National Income and Expenditure” (NIE 2006). These estimates are based, not on exact information but on incomplete data collected from many sources. The estimates of different items are therefore of varying accuracy, but where exact statistics were not avail ...
The Classical View
... decline in a nation’s aggregate supply, which destabilizes the economy by simultaneously causing cost-push inflation and recession. ...
... decline in a nation’s aggregate supply, which destabilizes the economy by simultaneously causing cost-push inflation and recession. ...
NBER WORKING PAPER SERIES Sebastian Edwards Working Paper No. 2110
... indebted to Ruth Klinov, Assar Lindbeck and Al Harberger for helpful comments. Financial support from the National Science Foundation through Grant #SES 84 19932 is gratefully acknowledged. The research reported here is part of the NBER's research program in International Studies. Any opinions expre ...
... indebted to Ruth Klinov, Assar Lindbeck and Al Harberger for helpful comments. Financial support from the National Science Foundation through Grant #SES 84 19932 is gratefully acknowledged. The research reported here is part of the NBER's research program in International Studies. Any opinions expre ...
Principles of Macroeconomics UVM EC11/SUMMER 2014
... introduction to the study of total employment and general price levels throughout the economy. Macroeconomics is not concerned with individual or industry level employment and prices. Instead, the focus is on the national or aggregate level (all industries and all individuals). The course also provi ...
... introduction to the study of total employment and general price levels throughout the economy. Macroeconomics is not concerned with individual or industry level employment and prices. Instead, the focus is on the national or aggregate level (all industries and all individuals). The course also provi ...
Principles of Macroeconomics, Case/Fair/Oster, 10e
... Attempts to stabilize the economy can prove destabilizing because of time lags. An expansionary policy that should have begun to take effect at point A does not actually begin to have an impact until point D, when the economy is already on an upswing. Hence, the policy pushes the economy to points E ...
... Attempts to stabilize the economy can prove destabilizing because of time lags. An expansionary policy that should have begun to take effect at point A does not actually begin to have an impact until point D, when the economy is already on an upswing. Hence, the policy pushes the economy to points E ...
Principles of Macroeconomics UVM EC11 Z/SUMMER 2015
... introduction to the study of total employment and general price levels throughout the economy. Macroeconomics is not concerned with individual or industry level employment and prices. Instead, the focus is on the national or aggregate level (all industries and all individuals). The course also provi ...
... introduction to the study of total employment and general price levels throughout the economy. Macroeconomics is not concerned with individual or industry level employment and prices. Instead, the focus is on the national or aggregate level (all industries and all individuals). The course also provi ...
Imperfect Information and Aggregate Supply
... equal the expected price under full information in (12). Here it follows because a linearization of the optimality conditions is equivalent to a quadratic approximation of the objective function.7 This property has been used at least since Simon (1956) to make problems of in ...
... equal the expected price under full information in (12). Here it follows because a linearization of the optimality conditions is equivalent to a quadratic approximation of the objective function.7 This property has been used at least since Simon (1956) to make problems of in ...
Subtleties of the Supply and Demand Model: Price Floors, Price
... inflation as its subject matter. The chapter begins by considering the major macroeconomic changes of the past quarter century (1980-2005). These changes include the rapid economic growth of China and India, which is made more significant when compared to the dismal growth of many sub-Saharan Africa ...
... inflation as its subject matter. The chapter begins by considering the major macroeconomic changes of the past quarter century (1980-2005). These changes include the rapid economic growth of China and India, which is made more significant when compared to the dismal growth of many sub-Saharan Africa ...
Estimation of the Equilibrium Real Exchange Rate in Russia: Trade
... a small open economy with a large proportion of commodities in its exports, like Russia, it is more appropriate to view the terms of trade as exogenously given. As stressed by Edwards (1989) in analyzing developing countries, it is more preferable to use internal real exchange rates defined as the d ...
... a small open economy with a large proportion of commodities in its exports, like Russia, it is more appropriate to view the terms of trade as exogenously given. As stressed by Edwards (1989) in analyzing developing countries, it is more preferable to use internal real exchange rates defined as the d ...
141topic3-as-ad-ch27-ppt
... The higher the real wage rate, the smaller is the quantity of labor demanded and the greater is the quantity of labor supplied. The wage rate that makes the quantity of labor demanded equal to the quantity supplied is the equilibrium wage rate and at that wage the level of employment is fullemployme ...
... The higher the real wage rate, the smaller is the quantity of labor demanded and the greater is the quantity of labor supplied. The wage rate that makes the quantity of labor demanded equal to the quantity supplied is the equilibrium wage rate and at that wage the level of employment is fullemployme ...
3.3 Macroeconomic models
... to the onset of a recession), the wage rate should fall, so that the market clears. However, Keynes argued that because wages were sticky downwards, this would not happen and unemployment would persist. This unemployment he termed demand deficient unemployment ...
... to the onset of a recession), the wage rate should fall, so that the market clears. However, Keynes argued that because wages were sticky downwards, this would not happen and unemployment would persist. This unemployment he termed demand deficient unemployment ...