this makes so much sense how you get from the short-run curve to the long-run, thanks! I feel like you really explained it logically so that it's easy to understand why it happens the way it happens.
thank you for your contribution. Would you please explain a little bit about why the B point moves to the C point? You talked so fast so that I can not understand clearly
Point B represents higher employment but also increased costs for the employer as wages are bid upwards to keep pace with inflation. Consequently, employment levels return to the natural rate at C.
Thank you. this is High School? I suppose it is too bad that deflation is so dreaded. The US has an extended period of steady state deflation during the Gilded Age, running into the Progressive ERA, during which vast technological increases and productivity increases allowed competition to cause prices to fall, increasing the value of money. They called it the Great Deflation, I believe. The Robber Barons managed to get rich while reducing prices steadily along the way. The value of the money increased. buggy whips were traded for car keys. The FED was the answer to this "malady." The next round of vast technological changes came in the 1990s. but, by then, folks had figured out how to mess up the bounty provided by technology and we ended up with the Dot Com Con / Bust. So, inelastic curves and Federal Reserve Banks are to be avoided like the recessions and depressions they construct--while they avoid deflation and stronger currencies at all costs.
Thanks, yes, secondary school. A timely comment from you yesterday as my students were working through a past paper which was entirely focused on deflation.
@@gconomics3766 I prefer to see the curves driven by science ripening into technology, rather than by equations written by quants. I really like what you are doing with these videos. Thank you. I'll watch a great many of them. :-)
Kia ora, Here's a question for you and your students if you wish to take it on. You are now operating in today's reality, which is a floating currency, not a fixed exchange rate like the gold standard days where Friedman developed his popular ideas. So this question relates to now, not then. So I am Prime Minister, and sending a directive to you as Head of Treasury & BOE that I desire full employment for all citizens who wish to work, and to allow a current inflation rate of 2%. The last Chancellor of Exchequer and Head of BOE whom both I fired said, "This is impossible Prime Minister, we only know classical theory", so I now turn to you with the same question. How does a nation operating a Fiat (floating) currency negate the PC and NAIRU by implementing a Buffer Stock of employed people, rather than accepting unemployment, hence achieving full employment between the public and private sectors? In your explanation use NAIBER (Non Accelerating Inflation Buffer Employment Ratio) to replace NAIRU, and include both fiscal (spending and taxation) and monetary policy (eg 0% permanent Policy Rate) options in your answer. Therefore note: Our nation has ONLY self imposed financial limitations by legislation, not actual ones, our currency is fiat, and thus we spend the currency FIRST to enable taxes to be paid in our currency (the official tax credit). Lastly, I will not accept a proposal based upon a UBI, and I hold the majority in The House, so I have the ability to pass as legislation on your recommendations for Full Employment & Price Stability based upon the above question. Good luck, your prize if you are correct is I won't fire you like the last two who failed this exam...
@@gconomics3766 Great thanks, would be interesting to get your feedback as my students likewise had interesting answers. We have been working through the differences in currency regimes fixed or floating as it pertains to full employment, moving beyond NAIRU thinking in a post COVID economy here in New Zealand. My regards, my name is Lee by the way, I have an Econ & Natural Sciences institute here in NZ, nice to meet you.
