This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 1 1 Classical/Monetarist LR Model Full employment Output in LR-Says Law Self-adjusting economy Vertical agg S curve at natural rate of unemployment/ natural rate level of output Fiscal Policy Complete crowding out G up I down no stimulus Just composition C versus I (and growth) Not needed self-regulating - full emp. Monetary Policy M->P only thru Quantity Theory of Money Classical Dichotomy/ Neutrality of money Real factors determine real variables K,L->y,Unemp (natural rate of unemployment,y) Loanable Funds Theory S&I-> real interest rate=nominal i exp. inflation Classical Dichotomy Neutrality of Money M->P and nominal int rate, nom W NOT real vars 2 In the News? 3 Course Issues HW 9 due Thursday Midterm Results Investment 2 qs with 10 EC (assign 8B) 2 4 Quick Keynesian Review 5 Keynes versus the Classics The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again....
View Full Document