• Save
New classical analysis of
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

New classical analysis of

  • 538 views
Uploaded on

Click Here ...

Click Here

http://www.eacademy4u.com/

Online Educational Website For You

More in: Education , Technology
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
538
On Slideshare
534
From Embeds
4
Number of Embeds
1

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 4

http://www.eacademy4u.com 4

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. New Classical Analysis ofOutput and Employment
  • 2. The effects of an increase in aggregate demand SRAS1 (expected price level = P1)Price level (a) Adaptive P2 b expectations P1 a AD2 AD1 O Q1 Q2 National output
  • 3. The effects of an increase in aggregate demand SRAS 2 (expected price level = P3 ) SRAS1 (expected price level = P1) cPrice level P3 (a) Adaptive P2 b expectations P1 a AD2 AD1 O Q1 Q2 National output
  • 4. The effects of an increase in aggregate demand SRAS LRAS 2 (expected price level = P3 ) SRAS1 (expected price level = P1) cPrice level P3 (a) Adaptive P2 b expectations P1 a AD2 AD1 O Qn Q2 National output
  • 5. The effects of an increase in aggregate demand SRAS1 (expected price level = P1)Price level (b) Rational expectations P1 a AD2 AD1 O Q1 National output
  • 6. The effects of an increase in aggregate demand SRAS 2 (expected price level = P3 ) SRAS1 (expected price level = P1) cPrice level P3 (b) Rational expectations P1 a AD2 AD1 O Q1 National output
  • 7. The effects of an increase in aggregate demand SRAS LRAS = SRAS actual 2 (expected price level = P3 ) SRAS1 (expected price level = P1) cPrice level P3 (b) Rational expectations P1 a AD2 AD1 O Qn National output
  • 8. When expectations New classical analysis are wrong:how an under-prediction of inflation could cause an increase in employment
  • 9. Effects in the labour market of an underprediction of inflation ASL1 ((W / P ) = W / P ) e ASL2 ((W / P )e > W / P )Real wage rate (W / P) Underprediction of inflation ADL O Q1 Q2 Number of workers
  • 10. New classical analysis When expectations are wrong: how a rise in AD could causean increase in national output
  • 11. How a rise in aggregate demand could cause a rise in national output LRAS SRAS2 (expected price level = P2 ) SRAS1 bPrice level (expected price level = P1) P3 P2 Actual rise in aggregate demand P1 a AD3 AD2 AD1 O Qn Q3 National output
  • 12. New classical analysis When expectations are wrong:how a rise in AD could cause a fall in national output
  • 13. How a rise in aggregate demand could cause a fall in national output SRAS2 LRAS (expected price level = P2 ) SRAS1 (expected price level = P1) P2Price level c P3 Actual rise in aggregate demand P1 a AD2 AD3 AD1 O Q3 Qn National output
  • 14. New classical analysis How the short-runPhillips curve varies with the accuracy ofinflationary expectations
  • 15. New classical version of short-run Phillips curves . . . . . . e e e P <P P =P P >PInflation (%) O Unemployment (%)