Macroeconomics

Last Min Prep & Important Points

Chapter 10

Economy in Short Run Okuns law – dec in unemployment – poor economy short run prices are sticky – classical theory – monetary neutrality only change in nominal valyes py = mv for inc output and fixed velocity and money supply, price deacreases supply side shocks – stagntions and inflation – stagflation – fed pumps in money to shift

demand curve to right

Chapter 11

ISLM prices are sticky in shrot run planned expenditure – what firms, houses and govt would like to spend if AE>PE, inventory inventory accumulate pe = c(y-t) + I + G tax cuts and inc in govt spending increase Y is curve plotted for a fixed Investment