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Macro Economics (The Invisible Hand (The citizens would solve the problems…
Macro Economics
The Invisible Hand
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Can take a long time to reach equilibrium, when everything is perfect?
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The impossible trinity
If the interest rates stay the same, money flows out to get better interests and exchange rates drop, which then causes unemployment
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Three factors the government want to keep stable, exchange rates, interest rates and the flow of money
The Paradox of Thrift
If you save for consumption, you can invest in research.Which could then cause wages to fall and people to lose jobs, but in the long run unemployment would drop
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Or you could spend the money now to create jobs, but people might not have money in buying the goods from the research and unemployment gets worse
The Phillips Curve
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But the employees would demand higher wages as they expected inflation to increase due to the employment rate increasing, which then makes the unemployment rate increase due to the lack of wages for other employess
If unemployment increases, deflation increases
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Rational choice theory
people don't always know everything and that could cause bad decisions and sometimes they rely on others to know what they're doing and just follow the crowd
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