 |  Macroeconomics, 6/e Rudi Dornbusch,
Massachusetts Institute of Technology
Stanley Fischer,
International Monetary Fund, on leave from MIT
Richard Startz,
University of Washington
Frank Atkins,
University of Calgary
Gordon Sparks,
Queen's University
Advanced Topics
Chapter ObjectivesAfter reading and studying this chapter, you should be able to:
| Understand that in a rational expectations model, people form expectations that are consistent with the way the economy operates. Anticipated monetary policy has no real effects in the short run or the long run. |
| | | | Understand that the random walk theory of GDP argues that most shifts in output are permanent, as opposed to transitory booms and recessions, and that changes in aggregate demand are much less important than changes in aggregate supply. |
| | | | Understand that real business cycle theory argues that money is very unimportant and that economic fluctuations are due largely to changes in technology. |
| | | | Understand that New Keynesian models of price stickiness offer "microfoundations" explaining why the price level does not always adjust quickly to change in the money supply. |
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2002 McGraw-Hill Higher Education