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Expectations played a major role in Keynes' theory of the determination of aggregat output and employment in market economies in the short run. Expectations about future yields on investment projects underlie 'the marginal efficiency of capital' schedule However, the volatile nature of these expectations plays a major role in explaining why investment expenditure and therefore output and employment in miarket econornies are subject to fluctuations.
Lab Exercise 1. Taco Del Mar has completed a study of weekly demand for its tacos in Washington State's regional markets. The study developed the following demand function: Q =
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Positive versus Normative Economics Positive Economics Positive economics considers with the predictions or observations of the particulars of economic life. For instance:
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