Showing posts with label Long Run Adjustment. Show all posts
Showing posts with label Long Run Adjustment. Show all posts

Tuesday, February 15, 2011

Supply and Demand-Side Economics

Demand and Supply of Aggregate Exports of Goods and Services: Multivariate Cointegration Analyses for the United States, Canada, and Germany (Kieler Studien - Kiel Studies) (v. 329)Long-run aggregate supply, however, can shift if the potential national income shifts. When potential national income increases, this brings the equilibrium price level down, and the equilibrium level of GDP up in the long run. Neoclassical economists believe that policies which intend to bring real economic growth and betterment should focus on shifting potential national income to the right (increasing it): they believe that policies which only focus on increasing aggregate demand merely cause price-inflation in the long run.
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Saturday, February 12, 2011

Factor Prices and the Output Gap!


Oh dear god, am I ever behind schedule for these notes...

Okay, today, we're going to have a look at what happens to our economic model when we allow factor prices (this usually refers to wages) to vary. Up until this point, we've been assuming that factor prices remain constant, but in real life, that isn't necessarily the case.

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