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Sticky wages

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Sticky wages

  1. 1. Not a quiz today, but if you had to choose one reality when you are 40: A. Be really famous B. Be really wealthy C. Have a comfortable lifestyle D. Have a large stable family E. Have a rewarding career
  2. 2. 1. Why does the SRAS curve slope upward? 2. Better question, why it tougher to move than the SRAD?
  3. 3. Keynes: Labor wages tend to stay at their current levels Classical: doesn’t happen in long run, flexible wages adjust Cyclical unemp. Flexibility = employment Housing market?
  4. 4. Keynes: firm’s prices tend to stay at their current levels Classical: doesn’t happen in long run, deflation
  5. 5. Keynes: firm’s misjudge economic changes and misstate prices Classical: doesn’t happen in long run, flexible prices adjust
  6. 6. Pages 754-755 #1 A-C #2 A-D #9 A-C
  7. 7.  Poster explaining active Keynesian stabilization policies pages 773-778 • Pictures, maybe a graph, explanation of stabilizers, multiplier effect  Mankiw, Ch34 Problems: 4, 5, 7, 9, 10, 13  Find 4 + bloggers discussing fiscal spending, cite the source and evaluate their ideas (what is their view of the spending multiplier, agree/disagree & why). (Mises.org, planet money, lewrockwell.com, marginal revolution, Mankiw, Krugman,WSJ, Café Hayek)

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