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8 Cards in this Set
- Front
- Back
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In classical economics, AS and AD are ?
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AS is vertical and establishes real output
AD is stable and establishes price level |
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In Keynesian economics, AS and AD are ?
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AS is horizantal at less-than-full-employment
AD is unstable (grpah is same as Classical Theory) |
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Keynesian instability comes from what 2 sourceS?
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1) Significant changes in investment spending (AD changes)
2) Supply Shocks (AS changes) |
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Monetarism
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1) Focuses on Money Supply
2) Markets are highly competitive |
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Monetarists + Government =?
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DO NOT MIX. Government influences are responsible for fluctuations in market price/output
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Equation of Exchange?
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MV = PQ
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Real-Business-Cycle Theory
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A theory that business cycles result from changes in technology and resource availability, which affect productivity and thus increase or decrease long-run aggrerate supply
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Coordination Failures
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Failure to reach mutually beneficial equilibrium
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