Wage-Setting, Price-Setting Relations
wage equation - W = PeF(u,z)
- expected price level - Pe, determines nominal wage
- firms/work
Economics
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Book page:
http://course-notes.org/Economics
Labor Flow, Wage Determination
labor flow - transition within labor force, into/out of labor force
- flow into employment from: unemployment, out of labor force
- flow out of
Fiscal, Monetary Policy
fiscal policy - controlled by the gov't by deciding on spending (G) and taxes (T)
- fiscal expansion - when gov't purchases increase
IS-LM Equilibrium
overall equilibrium - maintains equilibrium in both goods/money markets
- shift in IS or LM curves >> new equilibrium
- solve for Y in IS
Real Money, LM Curve
real money terms - as opposed to nominal money, which doesn't account for inflation
- M/P = real money supply
- M/P = Y L(i
Investment, IS Curve
investment - given as stock variable in simplest cases
- I = I(Y,i)
- increases w/ sales (Y), but decreases as interest (i) increases
Central Bank
central bank demand = currency demand plus reserve demand by banks
- currency - more convenient for small/illegal transactions
- CU
Intermediaries, Banks
financial intermediaries - institutions that use funds from ppl to buy stocks, make loans
- liabilities - amount owed to ppl/firms that gave the inter
Financial Market Equilibrium
equilibrium conditions- where money supply equals money demand
- money supply generally given as a constant (vertical line)
- doesn't
Financial Market Equilibrium
equilibrium conditions- where money supply equals money demand
- money supply generally given as a constant (vertical line)
- doesn't
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