assign9 - 1 Intro Macro Assignment 9 NOTES The...

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1 Intro Macro N. Sheflin Assignment 9 NOTES The Long-Run/Classical Model and another look at Keynesian Macro Investment Game – Round 3 and Career advisement ONLINE MIDTERM –Wednesday 10/26 4pm through Friday 10/28 8pm – Must be taken in 1 hour window during this period. COVERS weeks 1-8 in 50 multiple choice questions covering material from these weeks. You might wish to study as follows: - review the OUTLINE OF KEY POINTS TO DATE below -look up any of the topics you don’t understand -look at the textbooks’ end of chapter summaries -look at the big questions and notes in each assignment -review the ‘answered’ hw I posted -review the general hw questions you got wrong You must ASK YOURSELF QUESTIONS and TEST YOURSELF looking up material that you get wrong. READING Rittenberg Chapter 7, focusing on the material on long-run aggregate demand and supply. Chapter 11, just section 3. MONETARY POLICY AND THE EQUATION OF EXCHANGE Chapter 12, just section 3 ISSUES IN FISCAL POLICY focusing on crowding out. Chapter 16, just section 3 ‘INFLATION AND UNEMPLOYMENT IN THE LONG RUN And: also http://www.bized.co.uk/virtual/economy/library/theory/ -- read the material on classical/neo-classical economics and monetarism and Keynesianism and Keynes (bio, work, theories) and Friedman (bio, work, theories And the master at http://www.marxists.org/reference/subject/economics/keynes/general-theory/ Read the Preface, Chapter 1 and maybe, Chapter 3 (tougher) KEY POINTS note THE key is that the aggregate supply curve is VERTICAL in the LR Classical model explains long-run tendencies in the economy, and behavior if at full employment Output determined by K, L (and technology and raw material costs) o Output is at full employment/potential GDP – producing all we can with given amount of labor and capital o Output is insensitive to P (i.e. vertical aggregate supply curve) – since increases in price I nthe long-run increase both the demand for labor but reduce the supply and these cancel out. With no additional labor, output doesn’t change with changes in price o Output grows with increases in K, L, technology (later) o Unemployment is at the natural rate with only frictional and structural unemployment Interest rates determined by Supply and Demand for loanable funds = Savings and Investment (NOT Ms)
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This note was uploaded on 02/05/2012 for the course 220 103 taught by Professor Sheflin during the Fall '09 term at Rutgers.

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assign9 - 1 Intro Macro Assignment 9 NOTES The...

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