ECON 460 Lecture Notes - Lecture 15: Involuntary Unemployment, Aka People, Optical Illusion

• School: McGill University
• Department: Economics
• Course: ECON 460
• Professor: William Watson

Document Summary

Unemployment due in part to a refusal by the unemployed to accept a reward which relates to their (cid:373)argi(cid:374)al produ(cid:272)ti(cid:448)ity= (cid:449)o(cid:374)(cid:859)t (cid:449)ork at (cid:272)urre(cid:374)t (cid:373)o(cid:374)ey (cid:449)age. Men = involuntarily unemployed if, when real wages fall, both the agg supply of and demand for labour is greater than the existing volume of employment. Key(cid:374)es does(cid:374)(cid:859)t (cid:271)elie(cid:448)e le(cid:448)el of e(cid:373)ploy(cid:373)e(cid:374)t a(cid:374)d the real (cid:449)age is (cid:374)ot i(cid:374) determined in the labour market. The optical illusion caused by national in(cid:272)o(cid:373)e ide(cid:374)tities= so(cid:373)eti(cid:373)es produ(cid:272)ers (cid:858)(cid:271)uy(cid:859) their o(cid:449)(cid:374) products= their inventories. We (cid:272)ha(cid:374)ged the (cid:374)otatio(cid:374), (cid:271)ut it(cid:859)s the sa(cid:373)e for(cid:373)ula. We tend to use (cid:858)y(cid:859) (cid:894)output(cid:895) to deter(cid:373)i(cid:374)e the state of a(cid:374) e(cid:272)o(cid:374)o(cid:373)y. Investment depends on relation between marginal efficiency of capital and the rates of interest. Keynes argues that stable equilibrium does not equal to full employment. Fa(cid:373)ous (cid:272)hapter as it argues that (cid:449)e a(cid:272)tually ha(cid:448)e (cid:374)o idea (cid:449)hat(cid:859)s goi(cid:374)g to happe(cid:374) i(cid:374) the future.