Fixed Exchange Rate
fixed exchange rate – where countries maintain a fixed exchange rate
Economics
Forum reference:
Book page:
http://course-notes.org/Economics
Expected Investment
basic theory of investment - will invest if present value of future profits exceeds cost
- depreciation - determines how long machin
Expected Policy
IS-LM model w/ expectations
- IS curve in terms of real interest (both current and expected), while LM curve still uses nominal interest (only current
Expected Output
aggregate private spending (A)
- A(Y,T,r) = C(Y-T) + I(Y,r)
- Y = C(Y-T) + I(Y,r) + G = A(Y,T,r) + G
- increasing function of income (Y)<
Expected Consumption
permanent income theory of consumption - aka life cycle theory of consumption
- total wealth = human wealth + nonhuman wealth
- human
Adjustment Dynamics
adjusting - over time, equilibrium shifts back to natural level of output
AS-AD Equilibrium in Short, Medium Run
short run - behaves simply, equilibrium at intersection of 2 curves
Aggregate Demand Relation
aggregate demand - relates the equilibrium from the IS-LM model, but w/o interest
- Y = C(Y-T) + I(Y,i) + G
- M/P = Y L(i)
- downward slo
Aggregate Supply Relation
aggregate supply - shows effects of output on price level
- W = PeF(u,z)
- P = (1+m)W = (1
Labor Demand, Supply Relations
equilibrium - where price, wage setting relations intersect
- W/P = F(u,z) >> W/P = 1/(1+m)
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