The Theory Of Okun 's Theory

ECON 2301 Principles of Macroeconomics Time: Th 7:05 pm – 9:45 pm Synonym: 40512 Section: 023 Room: NRG2 2120

The sequential headlines of chapter nine were “The Determination of Equilibrium Output (Income)” and “The Savings/Investment Approach to Equilibrium.” The equilibrium output equation as listed by Case, Fair, and Oster was that of Y = C + I + G and the “savings/investment approach to equilibrium” was S + T = I + G. The second heading defined S and T as “leakages” and I and G as “injections” (p. 170). Once these two equilibrium approaches were listed on page 170, the government spending multiplier was defined by Case, Fair, and Oster as this: “the ratio of the change in the equilibrium level of output to a change in government spending” (p. 171). This term was also

The multiplier is the ratio of a change in GDP to an initial change in spending. The amount of spending affects total output of the economy. Mass layoffs by large companies are a concern to the citizens and leaders where those firms are located because this loss of jobs will lead to a decrease in spending because those who are unemployed are not able to spend as much money on goods and services. This unemployment will also cause local businesses to

Mankiw, N. G. R. E. G. O. R. Y. (2014). Principles of macroeconomics. Cengage Learning.

John Maynard Keynes was born in 5th of June 1883 and died at the age of 62 on the 21st of April 1946. His work in economics and his ideas fundamentally changed the practice and theory of modern macroeconomics as well as the economic policies of governments. Keynes is very well known for his exceptional work on the implications and causes of the business cycles and is also regarded as the founder of modern macroeconomics. The school of thought also known as ‘Keynesian economics’ as well as the various offshoots have his ideas as foundation.

In fact, much of the recent reduction in the deficit is due to the decline in unemployment” (p. 1). With record high deficits within the last years the idea of the government spending to spur the economy that ultimately would help reduce the unemployment level seems near impossible without further affecting the deficit rather than helping reduce it.

During the Great depression, British economist John Maynard Keynes developed what is known as the Keynesian economics. Keynesian economics is an economic theory of aggregate demand or the total spending in the economy. (Investopedia, LLC., 2003)

* Employees might decrease rate of production as demand decreases to create an impression of need and to preserve jobs

The Undesirable temporary connection between Price increases and Unemployment. The inflation is calculated along the perpendicular axis, and the unemployment percentage is calculated along the plane axis. This can disturb both the unemployment percentage or the price increases, it can disturb the splurging and the economy. It will partake in temporary impacts in anticipation of the economy being secure.

Anyone one could go around and call themselves a tragic hero just for fun, but it doesn’t mean the same thing as actually being one, meaning that you can’t become a tragic hero until you see your own downfall. In Chinua Achebe’s novel, Things Fall Apart, Okonkwo, the main character, had started with a bad reputation which caused him to grow up and earn great titles, face troubles due to christian missionaries, and later, face his own downfall. Okonkwo is a tragic hero because his choices not only led to his downfall, but also because he had no way of changing that events that were going to happen.

19) Suppose productivity rises in a particular economy, but wages stay the same. Other things equal,

that an economy can be below full capacity in the long-run. This theory, on the other hand,

What is Say’s law? Compare and contrast the role that it plays in the Classical approach and Keynes’ approach. Draw the implications for the design of monetary and fiscal policies to stabilize an economy.

J. M. Keynes, The General Theory of Unemployment, Interest and Money (1953: 1991, p. 156)

* McConnell, C., Brue, S., & Flynn, S. (2012). Macroeconomics: Principles, Problems and Policies, Nineteenth Edition. McGraw-Hill Companies, Inc.