420+-+2.0+-+Classical_Student - Econ 420 Intermediate Theory Money Income Employment Prof Aguilar Econ420 | Prof Aguilar 1 Course Outline 1.0 Measuring

420+-+2.0+-+Classical_Student - Econ 420 Intermediate...

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Econ420 | Prof. Aguilar Econ 420 Intermediate Theory: Money, Income, & Employment Prof. Aguilar 1
Econ420 | Prof. Aguilar 1.0 – Measuring Macroeconomic Data 2.0 – Classical Theory 3.0 – Keynesian Theory Course Outline 4.0 – Macro Theory After Keynes 5.0 – Open Economy Macroeconomics 6.0 – Economic Policy 7.0 – Economic Growth 2
Econ420 | Prof. Aguilar 2.0 – Classical Theory Section 2 – Classical Theory 2.1 – Macro History 2.2 – AS 2.4 –Equilibrium By the end of this section you will be able to : explain the key tenets of Classical thought identify the theoretical predecessor to Classical thought 2.3 – AD 3
Econ420 | Prof. Aguilar Section 2 – Classical Theory 4 Mercantilism (1500-1600) Bullionism- having the tangible money (gold) Government intervention- Classical Theory (1770’s -1930’s) Money is a Veil- the money doesn’t matter, its what you can buy with the money (purchasing power) Free Markets- no government intervention; perfect information (correct and available to all) and perfectly flexible markets (supply and demand can shift instantaneously; no friction); also it shifts to the perfect location every time Keynesian Theory (1930’s - 1970’s) See notes below
Econ420 | Prof. Aguilar By the end of this section you will be able to : evaluate the labor market. describe an economy’s productive capabilities. 2.0 – Classical Theory 2.2 – AS 2.4 –Equilibrium 2.3 – AD 2.1 – Macro History form the Aggregate Supply Curve Section 2 – Classical Theory 5
Econ420 | Prof. Aguilar Section 2 – Classical Theory 6 Production Function Output Labor Capital Cobb-Douglas Production Function Y = F(N,K) Y = AKaN1-a Technology of Level : A Income Total of Share s Capital' : α
Econ420 | Prof. Aguilar Section 2 – Classical Theory 7
Econ420 | Prof. Aguilar Section 2 – Classical Theory 8 Increasing returns to labor Constant returns to labor Diminishing returns to labor Negative returns to labor
Econ420 | Prof. Aguilar Section 2 – Classical Theory 9 Returns to Labor (Continuous) Returns to Labor (Discrete) dMPN/dN Postive= increasing returns to labor 0 = constant returns

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