An important issue that arises in macroeconomics has to do with how the economy performs, given that it is in a classical state of full employment. Recall Alan Blinder’s comment, noted in Chapter 1, about utilizing “inputs more efficiently.” This is called the efficiency or allocative problem in economics.
In this chapter, we will see how individual economic agents solve this problem as it relates to the provision of capital and labor. In the preceding chapter, we considered in detail how economic agents solve the problem of how much to save and therefore how much financial capital to provide to investors. Here we will combine that decision with the choice calculus of producers as it relates to the acquisition of physical ...
Get Macroeconomics, Third Edition, 3rd Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
