The Chimera of Macroeconomics

  If history is any guide, there are two types of masters: 1)      Type one: He explains simple things in as complex and complicated a way as possible. Not to mention, he speaks a language alien to the residents innocent. 2)      Type two: She explains complex and complicated things in the simplest way possible in vernacular friendly to most every listener.     The Sophist. The SRAS curve (for short-run aggregate supply) is horizontal because all prices are sticky . The LRAS curve (for long-run AS) is vertical because all prices are flexible .              In the medium run , some prices must be sticky while the rest flexible. Now, for the sake of convenience, suppose the economy comprises of two products, widget and gadget . Further on, the price of widget is fixated at 12 dollars while the price of gadget is at the flexible P ; the natural level of output is ...

  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 ...