Procrustean Art of Backtracking: “Short-run AS Curve”

 

To begin, we have in the AS-AD model the real GDP [Y = (Nominal GDP)/ (the price level)] on the abscissa and the price level on the ordinate.

             Some Q&A’s, first: 

1)     What is “the price level”? Ask macroeconomists, please.

2)     What is “the real GDP”? Ask macroeconomists, please.

3)     What is a “short run” like? Ask macroeconomists, please

4)     What is the “AS (for aggregate supply)”? Ask macroeconomists, please.

5)     What is a “curve” like? Ask macroeconomists, please.

6)     What is “the short-run AS curve”? Ask macroeconomists, please.

7)     How are “the price level” for GDP and “the price level” for the AS-AD model related? That’s a great question, but again “Ask macroeconomists, please.”

 

Among the rest of us. Everything but one of the above is vague and unknowable because they, we mean macroeconomists, keep it strategically ambiguous. The only sure thing is that the so-called “short-run AS curve” posits P= k, no more no less, where k for a constant.

             So what with P= k, merely a dot on the ordinate of P? There cannot be such a thing as a “curve,” or a line for that matter.

            Is P= k, incidentally, not the overarching assumption as for the shiny IS-LM model?


 Wait there is another sure thing. Both the IS-LM and the AS-AD models are for “the short run” because “we are all dead in the long run.” And, the short-run models are as if for a single moment! Much like in calculus, macroeconomists make Eternity (T0, T for time duration) by way of lining up “so many” moments (T0).

 

             Not weird? Yes, very much so.

 

Comments

Post a Comment

Popular posts from this blog

Procrustean Art of Backtracking: “Dimensions in Economics”

  The most basic dimension on earth (L 3 ) is the period of time (T) because the time duration in Here is limited for each and every creature, as opposed to in Eternity across the River (L -1 ) where the time stops lapsing (T 0 ).              The second most critical dimension in Economics is the currency unit defined by the Sovereignty as metric across the commonwealth for the value of utilities (U) of all types and kinds. The sources of utilities are not limited to the apple, the orange, the housing, taking a nap, playing with grandchildren and “leisure,” but way beyond our imagination.              Please do not account for anything in terms of mass (“M”) only, be it called “real quantity.” After all, “real” in macroeconomics may  in reality  mean “surreal,” if not “nominal.” As Adam Smith pinpoints, “It’s the consumption utility!”  ...
Read more

Velocity Wanted: A Trade-off in Eternity

    “It was many and many a year ago, In a kingdom by the sea , Those two maidens there lived whom you may know By the name of Annabel and Lee ” (sorry for the so many unauthorized variations).              Both are presupposed to live for 125 years in the kingdom; the royal economy is eternally stuck to “the natural level of output,” or g= 0 in arithmetic of Annabel and Lee. In 25 years after legitimate conception and subsequent birth, the two maidens begin to take different routes of life: the Cambridge way , viz., π= g+ m= m , vs the Princeton way , namely, π= g+ 2m= 2m . Note:   The Cambridge Quantity equation by J.R. Hicks (1937): M d = k ∙ P ∙ Y                                   The money demand by William Baumol from Princeton (1952): M d = ( b ∙ P ∙ Y / 2 i ) 1/...
Read more

Saving "the Market” out of Cambridge: “Roles of Government”

  Multiple Choices as to multiple Claims of us:             Cl. 1. There are lives in Mars.             Cl. 2. An organism can exist on the Moon.             Cl. 3. A society may be built in Death Valley.                 Cl. 4. A free market is untenable without the rule of law. We are:             Ch.1, kidding.             Ch. 2, silly.             Ch. 3, insane.             Ch. 4, sober.   No matter what we or your answers may be, there without the rule of law won’t be such a thing as liberty or freedom in the...
Read more