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Unformatted text preview: c. Modern Economic growth i. Output per person rises ii. Not experienced by all countries 15. Saving a. Trade off current for future consumption 16. Investment a. Financial Investment b. Economic investment c. Ecpectations i. Fureute is uncertain ii. Expecataations affect investment iii. Shock Means 1. Demand shocks and flexible prices 2. Sticky Prices a. When price does not change but demand does b. Explain flucturations in GDP c. All prices are flexible in long run i. Firms adjust to unexpected, but permanent changes in demand d. Many prices are sticky in short run i. Consumers prefer stable prices ii. Firsm want to avoid price wars...
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- Spring '11