ECON 102 Lecture 13: ECON 102 Lecture 13 Long Run Economic Growth Con’t

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2 Feb 2019
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Econ 102 lecture 13 long run economic growth con"t: established theories of economic growth. Y adjusts around ye (wage adjustment model). (y = ye) Y assumed to equal y* (ye = y*) I-rates adjustment model (classical growth model) (compared to wage adjustment model (classical growth model) (compare to wage adjustment model: classical growth model (s i y) Supply of loanable funds = national savings i. ii. iii. iv. National savings ns = private savings + public savings. Private savings = y* - c - t (remember y = y* in lr) Substituting (3) and (2) into (1) yields: ns = (y* - c - t) + (t - g) = y* - c - g, supply of loanable funds from households and v. Increase i-rate decrease c and decrease g increase ns ( loanable funds : demand for loanable funds (mei curve, the marginal efficiency of investment curve (mei, the demand for investment curve.

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