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September 06, 2007
Aggregate Supply and Demand
Monetary economics is the deepest and most controversial component of macroeconomics. What is money? Why does money have value?
One thing we agreed on is that money does not belong in agents' utility functions so we cannot simply put together another version of two goods - two prices.
What is the price of money?
For the Classical Model, a simple model of transactions will do.
This model of money demand generates the aggregate demand curve. The aggregate supply curve is vertical because output was already determined in the previous lecture.
We now have a more complete picture of business cycles in the Classical Model.
Posted by bparke at September 6, 2007 10:49 PM