Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The problem with the Keynesian model
We can classify two problems with the Keynesian model as developed so far:
1. Π is exogenous. Although inflation may temporarily deviate from wage inflation, this deviation can't be too large and it can't last for too long (since real wages would become unreasonable low or unreasonable high). This model has no determination of Πw and hence no complete determination of Π. A model which predicts an inflation of around 6% by presuming a wage inflation of 6% isn't very useful. Keynesian model with inflation is hence incomplete.
2. It is quite unreasonable to presume that Πw would be independent of Y. More reasonable would be to model Π Was a positive function of Y. If we are in a boom, L would be above its average and unemployment below its average. In such a situation, it's reasonable to expect wage inflation to increase.
To solve these problems, we have to make Πw endogenous. We do this by Keynesian model adding the Phillips curve.
Q. Relation between Money - wealth and income? Money isn't the same as wealth. An individual may be very wealthy however have no money (for instance by owning stocks and real e
Your firm usually uses about 200-300 tons of steel per year. Last year, you purchased 100 tons of steel than needed (at a price of $200 per ton) In the meantime, the price of steel
calculation of GDP
The short-run supply of a certain crop is perfectly inelastic, because it has already been harvested and no more of it can be grown until the next growing season. In order to raise
An electrical company audit indicates that motor consumption is 4x106 kWh per year. By upgrading to high efficiency motors a 10% savings can be made. The additional cost for the mo
exam notes of national income accounting
Explain the impact of Wal-Mart's supply chain management on its total product, marginal product, and average product curves. What has been the effect on its retail prices?
The system where workers concentrate on specialized tasks to make a product is referred to as: A. Coincedence of wants B. Roundabout production C.Freedom of enterprise
What do is and LM curve signify?
In the view of above complications, there is a long-standing debate on whether the fiscal policy should be active or passive in nature. Note that in the Keynesian context; even a p
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd