LRINFLATCLASS - LR Adjustment, Inflation & Policy Key...

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1 LR Adjustment, Inflation & Policy ± Key Points ² Vertical LR AS again ² Inflation – SR & LR ± Expectations and Shifts in the Short-Run Phillips Curve ± Long-Run Phillips Curve vertical ² No trade-off 1 ² Monetary and Fiscal Policy - LR Issues Friedman head Inflation causes Delong p curve shift Keynes General Theory ± Why did Keynes call his theory General? ± And why was it so hard for him to come up with it? 2 ± See annotated chapters 1965 In the News? 3 Sandy Huf aker for The New York Times Andy Lindlof with his daughter, Juliana, as he trades stocks from home. He says he earns six-figure returns, which would put him in the rarefied category of profitable day trader. Day traders are still out there, betting that they can beat the odds and make money. And since the recession, many figure they can’t do any worse than Wall Street.
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2 Course Issues ± Grades and grading ± The End is Almost Near ² Finals, etc – info coming ± ODE 4 ± Investment Game Short Run to Long Run Agg Supply ² SR & LR Equilib at 1 ± Output at Yn – U at Un ² Agg D increases to AD2 ± SR equilib at 2 ² P up, nom W unchanged – sticky, Y up, U down, *below* Un (note SRAS2 P LRA S 3 5 real W down too) ² Not LR equilib (W fixed, U<Un) ± Nominal Wages increase- SRAS2 ± New SR & LR equilib 3 U=Un, Y=Yn ²
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LRINFLATCLASS - LR Adjustment, Inflation &amp; Policy Key...

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