Sticky wages and prices
... wage will have been set too low and so inflation will be higher than expected and the real wage will have fallen. Because the real wage will have fallen, firms recruit more labour and so produce more output. Therefore positive money supply shocks are associated with higher output. However, because o ...
... wage will have been set too low and so inflation will be higher than expected and the real wage will have fallen. Because the real wage will have fallen, firms recruit more labour and so produce more output. Therefore positive money supply shocks are associated with higher output. However, because o ...
1 - ) The link between the money and the goods and
... consumption which leads to a decrease in aggregate output. The initial decrease in consumption contributes to the overall decrease in output. Planned investment does not bear all the burden of providing the link from a higher interest rate to a lower level of aggregate output. Real wealth effect: an ...
... consumption which leads to a decrease in aggregate output. The initial decrease in consumption contributes to the overall decrease in output. Planned investment does not bear all the burden of providing the link from a higher interest rate to a lower level of aggregate output. Real wealth effect: an ...
14.02 Quiz 1 Solutions Spring 03
... These higher savings serve as provisions to be used in case the government is forced to implement those harsh policies in the future. c2 is zero when households save all their extra income to prepare for future tax increases. Demand for goods and services is then unchanged in response to a tax cut, ...
... These higher savings serve as provisions to be used in case the government is forced to implement those harsh policies in the future. c2 is zero when households save all their extra income to prepare for future tax increases. Demand for goods and services is then unchanged in response to a tax cut, ...
Practice Test 2 - Dasha Safonova
... D. medium of exchange and the ability to buy goods and services. 28. If the money wage and other resource prices do not change when the price level rises by 10 percent, ...
... D. medium of exchange and the ability to buy goods and services. 28. If the money wage and other resource prices do not change when the price level rises by 10 percent, ...
International Conference on Draft of remarks prepared by Jan Kregel,
... capitalist countries, without creating unemployment and deindustrialization in the rest of the global economy. To the extent that domestic policy to support demand substitutes for foreign demand, it is possible for policy to improve employment levels, but price stability will in all cases depend on ...
... capitalist countries, without creating unemployment and deindustrialization in the rest of the global economy. To the extent that domestic policy to support demand substitutes for foreign demand, it is possible for policy to improve employment levels, but price stability will in all cases depend on ...
CHAPTER 10- Real GDP and PL in Long Run
... Change in Consumer Spending •Consumer Wealth (people’s houses fell in value) ...
... Change in Consumer Spending •Consumer Wealth (people’s houses fell in value) ...
Economic Schools of Thought – Monetarism
... provided strong and definitive evidence invalidating monetarism—partly by showing how undesirable it was to have money growth targets and partly in showing how poor are operating procedures for controlling M1 money growth by means of tight control of a narrow monetary aggregate. Monetarists argued t ...
... provided strong and definitive evidence invalidating monetarism—partly by showing how undesirable it was to have money growth targets and partly in showing how poor are operating procedures for controlling M1 money growth by means of tight control of a narrow monetary aggregate. Monetarists argued t ...
Lecture 3 and 4 I.F
... such as salaries and wages of state personnel, purchases of goods and services, interest on state loans and the transfer payments of allowances, pensions, scholarships and so forth. Capital Expenditure: spending on goods and services for the construction of projects such as roads, ports, airports, h ...
... such as salaries and wages of state personnel, purchases of goods and services, interest on state loans and the transfer payments of allowances, pensions, scholarships and so forth. Capital Expenditure: spending on goods and services for the construction of projects such as roads, ports, airports, h ...
Answers to Questions in Chapter 20
... prices will be the case anyway). At full employment, a rise in aggregate demand could not allow an increase in total output in the economy. An individual firm could only expand its output by attracting labour and other resources away from other firms. But when all firms try to do this, the effect wi ...
... prices will be the case anyway). At full employment, a rise in aggregate demand could not allow an increase in total output in the economy. An individual firm could only expand its output by attracting labour and other resources away from other firms. But when all firms try to do this, the effect wi ...
AGGREGATE DEMAND AND AGGREGATE SUPPLY The
... aggregate demand thus leading to a decrease in price level and output in the short-run. In the long-run however the output is going to return the narutal GDP level but the pric level will be the lower than under the initial long-run equilibrium b) Increase in government purchases is going to increas ...
... aggregate demand thus leading to a decrease in price level and output in the short-run. In the long-run however the output is going to return the narutal GDP level but the pric level will be the lower than under the initial long-run equilibrium b) Increase in government purchases is going to increas ...
Economics EOCT Review
... The Four Factors of Production 1. Land. Land is just what it seems to be, but it also includes any natural resources and man-made improvements that might be found on the piece of ground in question. Oil in the ground or gold in a creek bed are two things that would be included as part of the land, s ...
... The Four Factors of Production 1. Land. Land is just what it seems to be, but it also includes any natural resources and man-made improvements that might be found on the piece of ground in question. Oil in the ground or gold in a creek bed are two things that would be included as part of the land, s ...
NBER WORKING PAPER SERIES THE ROLE FOR DISCRETIONARY FISCAL POLICY Martin Feldstein
... interest rate is reduced to a near-zero level. Such high real rates would push the economy deeper into recession and cause an even faster decline of prices. They conclude that to avoid this vicious downward spiral, it is important to cut interest rates sharply while inflation is still positive if th ...
... interest rate is reduced to a near-zero level. Such high real rates would push the economy deeper into recession and cause an even faster decline of prices. They conclude that to avoid this vicious downward spiral, it is important to cut interest rates sharply while inflation is still positive if th ...
Final Exam - Austin Community College
... fail. Many citizens lose access to their checking accounts for several weeks. Also assume the Fed stupidly does nothing--does not buy or sell Government securities, does not lend at the discount window, does not change reserve requirements. Evaluate each of the following statements and select the be ...
... fail. Many citizens lose access to their checking accounts for several weeks. Also assume the Fed stupidly does nothing--does not buy or sell Government securities, does not lend at the discount window, does not change reserve requirements. Evaluate each of the following statements and select the be ...
3 - Studyit
... likely to save more money in their bank accounts. Overall this causes an appreciation of the exchange rate. If interest rates decreased, the opposite would happen. ...
... likely to save more money in their bank accounts. Overall this causes an appreciation of the exchange rate. If interest rates decreased, the opposite would happen. ...
Lecture 12: The Great Depression - personal.kent.edu
... The Short Run Supply Curve On the first point, there is considerable debate. People expected the depression to be short lived. There had been other sharp contractions, most recently at the end of World War I, which were followed by quick recovery, and many people expected this one to come to a quic ...
... The Short Run Supply Curve On the first point, there is considerable debate. People expected the depression to be short lived. There had been other sharp contractions, most recently at the end of World War I, which were followed by quick recovery, and many people expected this one to come to a quic ...
