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Title: hayeks model

Essay Details

Subject: Miscellaneous
Author: Dominick B
Date: March 11, 2011
Level: University
Grade: B
Length: 3 / 694
No of views: 0
Essay rating: good 0, average 0, bad 0 (total score: 0)

Essay text:

However this could be affected by the economies supply of resources. The initial increase in demand for capital goods could be greater than the supply, causing officials to decide whether or not to produce more capital goods and reduce the consumer goods or remain the same as did before the increase in demand...

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Hayek argued that an increase in production for capital goods and a decrease production of consumer goods would cause the proportion of capital to consumer goods to increase. If you were to keep aggregate supply fixed, it would cause the consumers income to be fixed. This would result in not a drop in demand for consumer goods but a decrease in supply for consumer goods...

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