Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The problem with the Keynesian model
We can classify two problems with the Keynesian model as developed so far:
1. Π is exogenous. Although inflation may temporarily deviate from wage inflation, this deviation can't be too large and it can't last for too long (since real wages would become unreasonable low or unreasonable high). This model has no determination of Πw and hence no complete determination of Π. A model which predicts an inflation of around 6% by presuming a wage inflation of 6% isn't very useful. Keynesian model with inflation is hence incomplete.
2. It is quite unreasonable to presume that Πw would be independent of Y. More reasonable would be to model Π Was a positive function of Y. If we are in a boom, L would be above its average and unemployment below its average. In such a situation, it's reasonable to expect wage inflation to increase.
To solve these problems, we have to make Πw endogenous. We do this by Keynesian model adding the Phillips curve.
A government purchase real GDP. Are increases in government purchases associated with increases in real GDP?Describe the important characteristics of perfect competition and monopo
Consider the following demand schedule. Does it apply to a perfectly competitive firm? Compute marginal and average revenue Price Quantity Price Quantity $95 2 $55 5 $88 3 $40 6 $
what measures should be taken to raise the productivity of the workers?
Definition of Exchange rate The exchange rate is stated as the price of one unit of currency in terms of other currency. If one euro costs 1.5 USD then 1 USD costs 1/1.5 = 0.66
2. Use the Quantity Theory of Money to explain inflation (a increase in the overall level of prices). (4 points) If you were a member of the Federal Reserve Board of the Governor
Q. Define market for overnight loans? The market for overnight loans Overnight interest rates are rates for loans over a single night - these are the shortest of all inte
What is productivity? Productivity or average product (AP): It is output person which is output divided through number of workers AP= Q/L. There labour Productivity can
The tax-adjusted Multiplier and the balanced budget Multiplier are explained below: Taxes act as drag on the multiplier effect of government expenditure, because they represent
In the long-run framework, deficits reduce: A. investment. B. taxes. C. government consumption. D. subsidies.
Q. Illustrate diffrent types of money? In most countries, one may identify two 'types of money': Bank deposits Currency and coins The total value of all th
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd