MGEA06H3 Chapter : Week 7 chapter notes

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MGEA06H3 Full Course Notes
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MGEA06H3 Full Course Notes
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Chapter 24 from the short run to the long run: the adjustment of. N when a nation"s actual output diverges from its potential output, difference is called output growth. N when real gdp is above potential output, demand for factors will be high and there will be pressure on factor prices to rise. N when real gdp is below potential output, demand for factors will be low and there will be pressure on factor prices to fall. Phillips curve originally, a relationship between the unemployment rate and the rate of change of money wages; now often drawn as a relationship between gdp and the rate of change of money wages. N when the economy"s adjustment process is slow to operate, or produces undesirable side affects such as rising prices, there is a. Potential output, y*, is the level of real gdp at which all factors of product are being used at their normal rates of utilization.

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