PP_Slides_Class_19_Wednesday_March_26

PP_Slides_Class_19_Wednesday_March_26 - Good Morning! Class...

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Good Morning!! Class 19 Wednesday, March 26
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1. If you are going to take the Make-Up final Exam on Tuesday, April 29, 5:45- 7:45 pm, you must notify me by e-mail by ___ a. Monday, April 28 b. Tuesday, April 1 c. Monday, April 21 d. Tuesday, April 29 e. Monday, March 31
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please read sections 5 and 6 on the syllabus section 5 Final Exam section 6 Make-Up Final Exam
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Goo Experiments for my example, assume 40 participants and since it takes 2 people to harvest that means at most 20 plots are harvested since ½ plots are high production, maximum production is 20 plots at 20 grams or 400 grams divided by 40 people or 10 grams per capita
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Equation of Exchange MV = PQ used to explain Quantity Theory of Money Classical economists
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Flexible Prices Experiment Suppose each person gets 200 yen MS = 200 yen x 40 people = 8000 yen
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Notice: to get 20 plots we need V = .25 but there are frictions such as the people with the high production plots may not be able to hire workers so V = .2
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8000 x .2 = 100 x Q Q = 16 plots 4000 x .2 = 100 x Q Q = 8 plots = 80 x Q Q = 10 plots = 50 x Q Q = 16 plots Money is neutral in the long run % chg M = % chg P -50% = -50% Wages and prices adjust to keep Q constant
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Crude Quantity Theory of Money V, Q constant wages and prices flexible
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PP_Slides_Class_19_Wednesday_March_26 - Good Morning! Class...

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