ECON 111 Lecture 5: EconomicsNotes5
Document Summary
In the long run recessions go away and we are stuck at full employment. Have to wait for recognition of price increases, contracts to run out, and renegotiate a new contract. Real wages: have been adjusted for pl (in ation) Nominal / real = cpi / 100 12 / x = 75 / 150 x=16 12 / x = 150 / 100 x=8. Govt options: expansion to yf (move ad right) in sr gdp & pl, wait for lr gdp & pl, demand-pull in ation. Govt options: contraction policy(move ad left) in sr gdp & pl, wait for lr gdp & pl, cost-push in ation (stag ation, Increases in ation because it is more costly to produce things. Govt options: use policy in sr to move ad, expansionary (cid:15482) gdp & pl, contractionary (cid:15482) gdp & pl, wait for lr, maybe the gdp (cid:15482) dresources (cid:15482) presources (cid:15482) inc. sras.
