This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: Rational Expectations and Economic Policy
... which rationalizes choices of the economic actors. The puzzle of the business cycle is why output does not vary smoothly over time but rather fluctuates about trend. In the postwar period some of these deviations of measured output from trend have exceeded 5% of trend output. The rate of capital acc ...
... which rationalizes choices of the economic actors. The puzzle of the business cycle is why output does not vary smoothly over time but rather fluctuates about trend. In the postwar period some of these deviations of measured output from trend have exceeded 5% of trend output. The rate of capital acc ...
Factors determining price developments
... Why can central banks influence (ex ante) real interest rates? The role of “sticky” prices Borrowing and investment decisions by households and firms greatly depend on the real interest rate. For example, the ex ante real interest rate is the real return which a financial asset is expected to delive ...
... Why can central banks influence (ex ante) real interest rates? The role of “sticky” prices Borrowing and investment decisions by households and firms greatly depend on the real interest rate. For example, the ex ante real interest rate is the real return which a financial asset is expected to delive ...
Section 4 FRQ Practice (College Board)
... (b) The United States government increases spending on goods and services by $100 billion, which is financed by borrowing. How will the increase in government spending affect each of the following? (i) Cyclical unemployment (ii) The natural rate of unemployment (c) If the marginal propensity to cons ...
... (b) The United States government increases spending on goods and services by $100 billion, which is financed by borrowing. How will the increase in government spending affect each of the following? (i) Cyclical unemployment (ii) The natural rate of unemployment (c) If the marginal propensity to cons ...
the impact of fiscal policy on inflation in nigeria
... inflation may also be called surplus demand inflation because it arises from too much money chasing few goods. More often it occurs where there is full employment so that the excess pressure on the factors of production leads to higher prices for the factors, ultimately leading to rise in the cost o ...
... inflation may also be called surplus demand inflation because it arises from too much money chasing few goods. More often it occurs where there is full employment so that the excess pressure on the factors of production leads to higher prices for the factors, ultimately leading to rise in the cost o ...
eee06-Weyerstrass2 3772754 en
... disposable income of private households. This additional income is only partly used for purchases, and parts are saved. To the contrary, government consumption immediately raises GDP by its full amount as it is by definition part of GDP. Finally, public investment not only increases actual GDP but a ...
... disposable income of private households. This additional income is only partly used for purchases, and parts are saved. To the contrary, government consumption immediately raises GDP by its full amount as it is by definition part of GDP. Finally, public investment not only increases actual GDP but a ...
1 Chapter
... Chapter 14 The Labor Market in the Macroeconomy 14.1 The Labor Market: Basic Concepts ...
... Chapter 14 The Labor Market in the Macroeconomy 14.1 The Labor Market: Basic Concepts ...
Slide - MyWeb
... supply curve holds that at any given moment, the economy has a clearly defined capacity, or maximum, output. With planned aggregate expenditure of AE1 and aggregate demand of AD1, equilibrium output is Y1. A shift of planned aggregate expenditure to AE2, corresponding to a shift of the AD curve to A ...
... supply curve holds that at any given moment, the economy has a clearly defined capacity, or maximum, output. With planned aggregate expenditure of AE1 and aggregate demand of AD1, equilibrium output is Y1. A shift of planned aggregate expenditure to AE2, corresponding to a shift of the AD curve to A ...
The Aggregate Demand Curve
... Any non-price-level change that increases aggregate spending (on domestic goods) shifts AD to the right. Any non-price-level change that decreases aggregate spending (on domestic goods) shifts AD to the left. ...
... Any non-price-level change that increases aggregate spending (on domestic goods) shifts AD to the right. Any non-price-level change that decreases aggregate spending (on domestic goods) shifts AD to the left. ...
Ch 29
... B. the quantity of real GDP supplied increases C. aggregate supply decreases, but potential GDP does not change D. the quantity of real GDP supplied decreases E. potential GDP and aggregate supply decrease ...
... B. the quantity of real GDP supplied increases C. aggregate supply decreases, but potential GDP does not change D. the quantity of real GDP supplied decreases E. potential GDP and aggregate supply decrease ...
Chapter 12 Aggregate Supply and Aggregate Demand
... 1. In the short-run, if prices increase more rapidly than expected, businesses find that their prices have risen more than the wages they must pay because contracts fix the wage rate. In this case, firms find it profitable to boost employment and produce more output. 2. If the price level unexpected ...
... 1. In the short-run, if prices increase more rapidly than expected, businesses find that their prices have risen more than the wages they must pay because contracts fix the wage rate. In this case, firms find it profitable to boost employment and produce more output. 2. If the price level unexpected ...
Keynes’s Monetary Theory: A Different Jnterpretation Allan H. Meltzer
... the capital stock is too small, i.e., below its saturation level. In fact, however, Keynes himself believed that low levels of outputand employment were caused by the capital stock being too large. Writing at a time when the economy was plagued by idle capacity, Keynes held that the capital stock ex ...
... the capital stock is too small, i.e., below its saturation level. In fact, however, Keynes himself believed that low levels of outputand employment were caused by the capital stock being too large. Writing at a time when the economy was plagued by idle capacity, Keynes held that the capital stock ex ...
The Wage Determination Process in Turkey
... is due to the reduction of prices of raw materials. These prices have a direct impact on domestic prices. This effect is much more effective on inflationary expectations. At the same time, it has been concluded that this effect helps to reduce the difference between the target real wage and actual r ...
... is due to the reduction of prices of raw materials. These prices have a direct impact on domestic prices. This effect is much more effective on inflationary expectations. At the same time, it has been concluded that this effect helps to reduce the difference between the target real wage and actual r ...
Money Growth and Inflation
... •Inflation causes dollars at different times to have different real values. •Therefore, with rising prices, it is more difficult to compare real revenues, costs, and profits over time. 6. A Special Cost of Unexpected Inflation: Arbitrary Redistribution of Wealth •Unexpected inflation redistributes w ...
... •Inflation causes dollars at different times to have different real values. •Therefore, with rising prices, it is more difficult to compare real revenues, costs, and profits over time. 6. A Special Cost of Unexpected Inflation: Arbitrary Redistribution of Wealth •Unexpected inflation redistributes w ...
Session 6 Inflation - University of Reading
... and prices are ‘pulled up’. This is easy to understand if we think about an individual product. For instance, when demand for maize exceeds supply, there are many people looking to buy maize, and they bid up the price. When such excess demand occurs for a whole range of goods and services, this lead ...
... and prices are ‘pulled up’. This is easy to understand if we think about an individual product. For instance, when demand for maize exceeds supply, there are many people looking to buy maize, and they bid up the price. When such excess demand occurs for a whole range of goods and services, this lead ...
Inflation: Its Causes and Cures Inflation • Introduction
... • Once the SP shifts upward with higher p(e), Y cannot exceed Y(n) unless p accelerated • Long-run equilibrium exists only when there is no pressure for change ...
... • Once the SP shifts upward with higher p(e), Y cannot exceed Y(n) unless p accelerated • Long-run equilibrium exists only when there is no pressure for change ...
4. Aggregate Demand Policy Under Alternative Supply Assumptions
... Because the AS curve is vertical in the long run, only supply-side policies (policies which shift the aggregate supply curve) can produce long-run growth. Deregulating industries, making laws and regulations easier to comply with, and changing or removing unnecessary laws all have the capacity to do ...
... Because the AS curve is vertical in the long run, only supply-side policies (policies which shift the aggregate supply curve) can produce long-run growth. Deregulating industries, making laws and regulations easier to comply with, and changing or removing unnecessary laws all have the capacity to do ...
Why Income Inequality Matters
... an equilibrium may feature a positive output gap and unemployment. The rest of the results comes out of comparative statics exercises, which demonstrate that the reaction of equilibrium employment to economic shocks depends critically on whether the economy is demand or supply constrained. If the ec ...
... an equilibrium may feature a positive output gap and unemployment. The rest of the results comes out of comparative statics exercises, which demonstrate that the reaction of equilibrium employment to economic shocks depends critically on whether the economy is demand or supply constrained. If the ec ...
Full employment
Full employment, in macroeconomics, is the level of employment rates where there is no cyclical or deficient-demand unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment, such as frictional unemployment (there will always be people who have quit or have lost a seasonal job and are in the process of getting a new job) and structural unemployment (mismatch between worker skills and job requirements). Unemployment above 0% is seen as necessary to control inflation in capitalist economies, to keep inflation from accelerating, i.e., from rising from year to year. This view is based on a theory centering on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); in the current era, the majority of mainstream economists mean NAIRU when speaking of ""full"" employment. The NAIRU has also been described by Milton Friedman, among others, as the ""natural"" rate of unemployment. Having many names, it has also been called the structural unemployment rate.The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and their political biases. For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a ""range"" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the ""full-employment unemployment rate"" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus & minus the standard error of the estimate.The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or ""potential"" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.