Lecture 10

Lecture 10 - Econ 102 Fall 2008 Lecture 10 Keynesian...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Econ 102 Fall 2008 Lecture 10 Keynesian Economics
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Preview How the Great Depression Changed Economics Forever What Keynes said Is it relevant?
Background image of page 2
3 The Great Depression 0 5 10 15 20 25 30 90 00 10 20 30 40 50 60 70 80 90 00 Unemployment Percent of the labor force Unemployment went to 24% in three years Gdp fell 20% below trend Keynes changed the political landscape forever
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 John Maynard Keynes Keynes argued that unemployment is typically inefficient Labor is traded at the “wrong wage” and typically more people would be willing to work at the current wage The labor market is NOT in a classical equilibrium John Maynard Keynes 1883--1946
Background image of page 4
5 Classical vs Keynesian Economics Should we intervene to stabilize the business cycle? Classical 70% of all shocks are due to unforeseeable productivity shifts. There is nothing we can or should do about them. Keynesian- Most shocks are due to inefficient markets reacting to “irrational exuberance”. We should try to stabilize these through government intervention.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Founder of RBC Theory Business cycles arise from accumulated random shocks to the productivity of technology. Markets are always in
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 28

Lecture 10 - Econ 102 Fall 2008 Lecture 10 Keynesian...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online