Macroeconomic Theory. Chapter 1 Motivation for Macroeconomic models?. Macroeconomic models help us in framing key questions that face macroeconomists: How are the levels of output and employment are determined and why they fluctuate?
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Motivation for Macroeconomic models?
Macroeconomic models help us in framing key questions that face macroeconomists:
The 3 equation model
What do we mean by impact on the economy?
The basic model must answer the following questions:
refers to the supply of goods and services. The supply side consists of:
Refers to aggregate demand for goods and services and consists of:
Economic Growth setters are not in eq, wage setters would raise wages as their living standards reduced. Raising money wages will raise inflation even further.