Jim Whitney

Economics 101

   Macroeconomic equilibrium: basic geometry Three possible short-run equilibrium situations  

a. Full employment	b. Economic boom	c. Econnomic recession
-Y=Yf   -Profits are "normal"   -U=Uf => labor market is in equilibrium => stable wages and prices	-Y>Yf   -Profits are above normal   -U<Uf => excess demand for labor => upward pressure on wages and prices	-Y<Yf   -Profits are below normal   -U>Uf => excess supply of labor => downward presure on wages and prices