第九章经济波动导论.pptVIP

* [The example in the textbook is an exogenous INCREASE in velocity.] The exogenous decrease in velocity corresponds to an exogenous increase in demand for real money balances (relative to income transactions). This might occur in response to a wave of credit card fraud, which presumably would make nervous consumers more inclined to use cash in their transactions. If there’s an exogenous increase in real money demand (i.e., an increase NOT caused by an increase in Y), then M/P must increase as well; if the Fed holds M constant, then P must fall. Thus, the increase in real money demand causes a decrease in the value of P associated with each Y, and the AD curve shifts down. The velocity shock is the only AD shock we can analyze at this point, because (for this chapter only) we have derived the AD curve from the Quantity Theory of Money. However, if you have not derived the AD curve from the Quantity Theory, as discussed in the notes accompanying the title slide of this chapter, then you could pick any number of AD shocks: a stock market crash causes consumers to cut back on spending; a fall in business confidence causes a decrease in investment; a recession in a country with which we trade causes causes an exogenous decrease in their demand for our exports. * Note the economy’s “self-correction” mechanism: When in a recession, the economy --- left to its own devices --- “fixes” itself: the gradual adjustment of prices helps the economy recover from the shock and return to full employment. * * Oil is required to heat the factories in which goods are produced, and to fuel the trucks that transport the goods from the factories to the warehouses to the Walmarts. A sharp increase in the price of oil, therefore, has a substantial effect on production costs. * And, as output falls from Ybar to Y2 in the graph, we would expect to see unemployment increase above the natural rate of unemployment. (Recall from chapter 2: Okun’s law says that output and