On Mon, 14 Mar 1994 06:51:12 -0800 Rudy F. said:
>The problem is that investment is a component of aggregate
>demand but it also affects aggregate supply since
>investment is the change in the capital stock.
but can't you say that the AS curve is drawn in the "Keynesian
short run" in which the stocks of means of production are
assumed to be given? Then capital investment leads to
shifts in the long-run AS curve over time...
>
>According to neoclassical-Keynesian theory inflation does
>not lower real wages. In the real world inflation is the
>major mechnanism for lowering real wages and even
>principles of economics students who don't seem to understand
>much understand this fact.
>
I tell my students that real wages are determined by a race
between prices and wages and that those with more bargaining
power can win the race (so that w/p rises). The greater
the rate of unemployment (cet. par.), the lower workers'
bargaining power. So I blame unemployment (or other anti-
labor policies of the government) for low or falling real
wages.
in pen-l solidarity,
Jim Devine BITNET: jndf@lmuacad INTERNET: [EMAIL PROTECTED]
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (off); 310/202-6546 (hm); FAX: 310/338-1950
