ECM B06: Course Plan Short-Run (SR) The SR is such a short period of time that prices are fixed. [The technology is also fixed as is the productive capital stock. Variations in employment (L) lead to changes in output (Y).] Long-Run (LR) The LR is a long enough period of time that all prices are perfectly flexible. At the same time it is a short enough period of time that the productive technology and capital stock continue to be fixed. Very Long-Run The very long-run is such a long period of time that not only are all prices perfectly flexible but all inputs (K & L) and the productive technology can vary as well. Closed Economy Open Economy Both Ch 10, 11 12 9 Long-Run (LR) 3, 11 5 (& last few pgs of 12) 4, 6 & 9 Very Long-Run 7, 8 n/a n/a Short-Run (SR) • Chapter 2 deals with measurement issues. How do you measure aggregate output (real or nominal), the average price level and the rate of inflation. These issues overlap all of the modelling chapters to follow. • When dealing with practise questions think of what chapter material (or model) applies and what is exogenous (given) and endogenous (to be determined).