ECON 219 Lecture Notes - Lecture 15: Edgeworth Box, Deflation, Nash Equilibrium
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ECON 219 Full Course Notes
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Intersection is/lm and how it moves around when price levels change. Classical keynesian story: income = c + i + g + x m. Marginal propensities keep running around until everything is absorbed (savings/taxes/etc). Injection forces are c + i + g + x. Demand for labor comes out of the s shaped curve (supply) that shows diminishing returns. Intersection demand/supply of labor gives quantity exchanged put back into production function, put back into income which becomes one point on the aggregate supply curve. Can get many points because of inflation. Evident to employers/employees that mere inflation cannot produce true profits or increases in wages: goldberg & tinbergen. Argument that policy is to be employed to change level of income or change mix of incomes, you get stories having to do with a family of multipliers, instructing you that more government is better than less.
