ECON 330D1 Chapter 9: Chapter 9
9 Feb 2017
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Chapter 9: actual output, disequilibrium, and the interaction among markets. Previous analyses have been made under the assumption that markets clear (demand equals supply) and continue to do so immediately following a shift or deviation. This chapter examines the behavior of agents at non clearance levels. Sometimes, there aren"t enough jobs in the economy, which leads some people to be unemployed even though they are actively looking for a job. It is defined as the difference between the available number of jobs and the number of workers at existing wage. Unable to earn incomes, the involuntary unemployed reduce consumption expenditures and therefore aggregate demand. This is known as a deficit of demand. Since firms do not want to pile up inventories, they reduce employment below fe levels. This translates as a link between aggregate demand and unemployment, one not fully seen by the sras and lras curves. When equi deviations occur, the role of monetary and fiscal policy will change.
