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post by Sunday, September 27, 2009

3
4 5
 6
3 7889 
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     <=

 4>
?@
   
   83
A
B:; 5
C
;3 
 
@
;  643
 

 4:
 BD : = << => ?@
  A
 
;=ႚ 3B <=
flow)) 

C႒@
 =   <=3
;
(circular flow
;
 =ႛ 5:  
   ;=ႚ 4O =
 4>

3B <= 
C 

3


 


;=ႚ money supply  P8? <P 5< P 
   = instrument potency ႒@
 4>
QA6C;=ႚ 3 3
 :
;  
  B
 ?@3 instrument potency   4 55 ;6P>
;3
?
  

5;A
 ႟  8  5
 5 5<႓@ 5  5 ;
3


= =  4> T


 @႓ႛ   <

 ; U 3
;: = 5
 =ႛ
5<; 5  ႟  8 = 
C  5;႒@
  4>

5=?@5
  
B   
3B <= = 
C 

3
 4> <
<
 
 8
84 
  


:5 5႒@ <
 ; = 55  4> 
<
: 
;;  ႒@ ; ; 4>
 5;
55884 
5;
5 58 84 55;
558 84  
:; 3P<P  
5
 5 
5B
5 B<
 = :
3
5 ႒@  =ႛ <
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<     ; 6C8     ?@ ႒@ 
; 4> ?@355  5  B   
:; 
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 4>  T@

;
   3
4> 
    3
4> 5 
:
 
   
3
4>

?@3 
C
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;
A
@
;  3

A 6P > V   4  3

=  4>
6
33 ႛ =:
 ?@  A
႒@<3 ;4 ?@
C ;=ႚ P3 
 3
3ႛ =  4>
T
3 = = 5:4    A
ႛ  =;=ႚ A
 :>ႛ 55 
 Aႛ  =;=ႚ A


 4:;  A
;
<
 ႓@3ႛ : 4> ?@
 4 ႛ  
  ;=ႚ A

A3  = = 5:4  :4  ;;=ႚ 5 = ; 43ႛ : 4>


  < =  55 =ႛ : 4> 
C႒@
 =   U3

A
B B <P ;=ႚ
<= 
C 

3

A 6P> 3 8 <
 ;< P 4
A
<P; ႛ =ႚ 85 =ႛ 
 
5;:4 ;=4:; 5
  <  U3


   :4;   ;;3

=
?4
34> ? 4 <= 55 
 ႓@
 3
 B<
 4> 6

3=:


C
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     3
3 ႛ => ?@3  3
=5
B< P ;=ႚ <= 3
<
 4
 4> ႒@
3 =     
ႚ 3; 3   3
  4>
?@3 =ႛ ႟  3   ႒@
 3
    ႒@ 
 ႟  3 A


33
<4    3

= 3

= ;႓@  : 4:
; 
6P>

 ;
5; ?@W
 8< @
;<
 3
:႓@  <B  
 U4P< 
 
3 < 4> ?@3  <B႒@
;=ႚ 3 :

    4:; =  = P8?  8?    ႓@
8
33;
ႛ  4> 5
C
;5<5 58
8 =ႛ @ =  <B
 P8?  @; =  <B
 P8?  33ႛ
;6P> 5X  

 = @
;44  @   4 =
ႛ  W


W

 “;D<
64  ႒@
 “ :<3= W
;=ႚ 5A

;=ႚ @
;@  ႛ = B =ႛ  B;=ႚ money
supply  ႓@ ;
3 = instrument potency 
 
 
  


 
=
 4> ?@3 
C႒@
 =   ႟  8 ;A
5: ႒@
 = B;=ႚ 
 ;=ႚ
5:3ႛ : 4>




 :
T 3
=  ;
   
= indicator   4> 5
: 5< =
  
 retail prices =  4> 3; 
;=ႚ 
 A
T <:4 ;
 8 

;
 @
; B
;
 
 4>   =ႛ ;=ႚ 
   5 5<Z

 PB@4 @
; ႓ႛ    = 5
;=ႚ  
 A
7 ;
  =ႛ [ ;
  5

=
;  4> 
   3

    = B3

3= QA6C =ႛ 5;
P8?3< P  5< 4> 
  

A
B@
;   ;

<;
3B3 ႛ =  4>


  
 =5 income redistribution
redistribution
tribution balance of payments =ႛ 5;5:;
5: 
 4> 
A
 8;< P 
 (T
- 3
3<

)


) =ႛ  3<

 :;=   <P
;=ႚ
8  @
; 
 <P
  8A  = 55  ;;< P 
  redistribute 3 4> ?@5

 5  = ; = 6C 


5:
   
 assets   (T
- 5  )) 
 
;@
55  
 4> ?@
 55  B

= 4B B3 ႛ = 6C  
5
B 3
 4> ]99^ 
_` <   3 3 A
5 7889 
<  <;
 :4 3;


 ႓@>  _` <  6C


<
5
=4:; ;4 5   
 ;
   B 

 =5  ;@ 5;U 43ႛ : 4> ?


 6C5  ႓@  
 3
5

3ႚ 53 = = 
 4> 
A
savings U 5 5 = ;@ < P :@
wealth))  redistribute 3 3

 savings
 4 assets  
;@ :@ <
48 (wealth

3
  4>


 5: 
 <
;;
 =ႛ ;@ B  
 4> 

     =5 fluctuations 

 4> 5=?@5
@
;5<58 585 
<

;;
  3

 4> ;   =ႛ 8    ႛ  ႚ =3
 4> B 
4P = dB : :  4>
B 5;  ?U3
7e8  dB  3=  `88 =ႛ ႓@ 5  =ႛ  ;  
B3႓@
  
 < = =ႛ ;
 4 :ႚ> 
  335

dB<  


?U3
7e8   4 3=  
;
 ႓@> ?@355   @
;<
 
=; 4>     
  <B  8<3
6 =ႛ 3 4:႓@ U4P 
 ;  
 4> ?4 ?@3; A

;=ႚ @
; @ ႛ = B႓@ 
        3
ႛ =
 4>

?@3 55   3


=5
 ;@
3P ;=ႚ  8 8
 3
 B3

 4>  
3P4  
B5 




 B

<
 ႓@ B :@
538
 5U
 8  
; 4> B

  =5  T
- 5Of3  
3
 =5
_ 

= OC P 6=ႚ
4:; 
;   ;  <  
 
3 
<
 ႛ   4>  

 =ႛ 4:; ?@A
<  ;
8 
; 4> ?@  =ႛ  

@
; 3
4:; 5 5
5 
 3 4> ?4  
3P4    6

 @
;;@ 3 

;4<3=> 5Of3 
B
<;: = ==3 3   ;6P :;
 5Of3  6=ႚ;႓@; T;


533;
 5
; 

<
;;
= 53 
 ;
=: = 
3  =ႛ  4>
68
;5  B
;
;@ 3=  4>  
;=ႚ @
; ;@<

;;
<
; 4:; B
;=  4: = 
<
 ႚ3=႓@  3 P 

 <P

 8  
68 45
 4 4;
@
;3 3 <P   
3=<=> 53; 55 


5
 = @
;3 ;
4  <
 <@  5;4;

=ႛ ;
ႚ B
< ႓@
 
B 3
ႚ 
:  = 55    =႓@> B:; 
5 
 T@
4 @
W
=> ?@3; A


 @
;;@5U
4B B;
 3
= =
5: =>


 
 
A

 @
;5 Z =ႛ  
 <4  ;
5X = Balance of
payments  4   4> 43ႛ  

  < 4:; ?@;=ႚ ႚ  A

h

: = 55 3
 4>   B
= B<   A
B     3 =
 dB   ႓@  4> ?@
  ႚ 
C3
႓@ <  
C ႒@
 4> ?@5

Balance of payments @44  <


 4>


 
 5;5  =ႛ <: 4> 
;=ႚ 5:  ;ႚ5  3 =
5;5   <=;
 4> <
;;
  @  ႛ =ႚ5  @
;3  
 A


;  
6Z
;< P  
;; 4> 53 h
@
;
 

@
;3 ႒@ 5
3 risk professionals    55: 5354  5 ႛ 

8
8   4>


5:   A

  OC  3 B ; =5
<::;
;
;4 :4;
  

3
႓@:
=ႛ 5j;
4႒@3
႓@>  3 @44  
  ; 3
ႛ => 5=35 
5 
:=<3=
3   5: ႒@   
 = ;   
5
    4> 3<
  5:   ႒@
 =
      ;   
5
 3  
4> ?@
   3
3 3    3 =ႛ 6
OQ?5U5

6
OQ?5U5
 ever-ever- rising inflationary spiral : = 


33
3  ႓@  ;႓@ <
  = 5 5
 ;


=> ?@3 :8 = 5:  =ႛ
@
;5:
55 3 3= ႚ 
 W
 ;
;4 <3
 = P8?

 5
5 B
ႚ 35 4>


    3
; P8?



  
3
  3
; P8? 5
 


  =
8435
:=5
 
 (Demand- Demand-pull inflation)
inflation) =ႛ ;   5
 
 (Cost-
Cost-push inflation)
inflation)
55
 5
 5 B4 3 4> @
;5:
55 =    aggregate demand =ႛ
aggregate supply ႚ;=ႚ :   5:5  4> aggregate demand :
 
<<P 5; ;@ =
@
;3 
 =ႛ 
<

;=ႚ  <=   4> <:;
 5
3  
643
5;5 5   3ႚ :m;3= :

 6
OQ?B
;  aggregate supply curve =ႛ
BD  4> ?@ curve  : = : A
equilibrium price level =  4> ႓@;35
  =ႛ =႓@


 4>

5  



 aggregate demand aggregate supply ႚ : =  ;

U 3
=   =ႛ
  5 5
   4> 8435
:=5

 U = 
:
 aggregate demand
 3
႓@ 


 = AD curve A
B
6 ;ႚ<
 = 55  :3

>
>

5  
 ႚ; =5  aggregate demand  3
=5
 3=  <
  4> 8435

:=5

  = 5
; 
 
< 3

(<ႚA ) 5; 5<;  

3

(<ႚA ) ;@
C 
3

(<ႚA ) ႚ 
C 

 8435
   3

(<ႚA ) ?@5 5
33=  4>

;   5

 U = 


 aggregate supply curve  646 ;ႚ3
<
 =
55 
5 5  :3
> ;  ႒@
3
=5 @
;3  5 =ႛ   
  3
C
3

  3 4> ?@5
    ႓@   
C3
<
 4>
?@3 ;   5

 3
; = 5
; 
   <   ;   ႒@
3


35
  
3

 5;;=ႚ <485 5 
  
3


 
=  4>
6
OQ?B
;

 3  5
 
 5   5
 
 <
    5


 5   5
 
 <6
8
<6
8<4p
dB
 ;
  = ; ႒@
 3
;:;


5 =

3;4 6
OQ?  
 ;ႛ<
  A  = 5 
5<   ;<
 
 36P> P8?;;


demanddemand--side P8?  =ႛ supply
supply--side P8?
 ; =5 
6
OQ?5 <6
;

 B<  
<
 4>

Demand-
Demand-side P8? 
monetary policy =ႛ fiscal policy :႓@ ; 4
 4> Fiscal policy  5;5<; 
5 
  =ႛ <: 4> aggregate demand  5;5<; 3
 5 
 
r

<<P
s <=
  3
  = P8? 5<႓@ 3
 B5
 33
3ႛ ; 4> ?
 deflationary
fiscal policy  4> 
55
  = reflationary fiscal policy 
 533=W
=ႛ
:
 =5  ?@:



6P>


  = Monetary policy 
 ႟  8<= (money supply)supply) 5   (interest rate)
rate) 
  =ႛ
<: 4> 5; ႟  8  3
 5; ႟  8 53;
<33 <B instrument potency 3
 B5
 3 3
 3:
  ;<
QA6C <

6Z
;T?
   5  
    = B3  =ႛ aggregate demand  3
5

33;
ႛ  4>

Supply-
Supply-side P8?
 ;  ႒@
3
  
  =ႛ <: 4> ?@3   ;

  =ႛ
8  monopoly 3
   (T
-  <B႒@
5<;=ႚ   ;   <

ႛ <B P8?
  3  
  ; P8
3;

  < 8?

8?
   ႒@ <<B
<Z
<
3 ႒@
 3 4
 take take--over 3
  < ႛ <B
 
)) =ႛ  3
 
; P8?
   (T
- tax incentives 
 < <  ႓ႛ   ; 5


:U dB
  ;@ 3<

5
3< ; 5@5T
 5 


 <B
 
))  3 4>

O

O:;; 53 


   5<
 U3

A
B@
;5  
  =
3vC
; A 6P> ?A

;=ႚ 
: = 5:=  4> :3 8 8  5 5
5::;=ႚ B@
;@  ႛ = B;=ႚ ;3
? =  4> <       6P>
   3= B5;
3B6P> B5;
3B 3= P8? @ 5< 
;:= 6P> P8?;:=  3= P8?5
5 B 
6P> P8? 5
5 B
   3=
B56P> B5 3= ;ႚ 
  6P> <
 = 
5=ႚ5B = B = 
3P   ;
  ႚ 5;႒@:  4> :
:
 
3
5 =B@ႚ 35 4> ?@3 <Ap
 = 643 <
= 5=ႚ 5B= B= ;;B

3=4 =ႛ 
5<5
=  4> ?
 B@
; <
 

; :<
 

 
;
 :55< @<P 

;  = 63
 ;=      @  ႛ =4 5;< ;
U 3
;A
 
@
;5:
55;=ႚ 5X 35  
 ;<
 5 4>

 (7[ 9 7889)


;BBD 
-

-

Colander, D. (1995) “The stories we tell: A reconsideration of AS/AD analysis“, Journal of Economic Perspectives, 9: 169-
169-
88

Cukierman, A. (1995) Central Bank Strategy, Credibility and Independence: Theory and Evidence, MOT Press, Cambridge,
Cambridge,
MA

Evans, M. (2004) Macroeconomics for Managers, Blackwell Publishing, Oxford

Gartber, M. (2003) Macroeconomics, Prentice Hall Europe, Harlow

149
Romer, D. (2000) “Keynesian macroeconomics without the LM curve“, Journal of Economic Perspectives, 14: 149-
49-69

Sloman, J. (1999) Economics, 3rd edition, Prentice Hall Europe, Harlow

(photos-
(photos- google images)

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