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What is Advanced Macroeconomics II Overview about?

This document discusses basic macroeconomic models. It introduces the textbook (static) macro model of the aggregate labor market and aggregate goods supply under different price expectations assumptions. Specifically, it examines the aggregate supply curve under the adaptive expectations hypothesis, where expected prices are adjusted based on past errors. It shows that if actual prices increase above expected prices, employment and output will also increase as the real wage decreases.

Author

Ravi Kashyap

Language

EN