Top 10 vacation destinations for This analysis would receive explicit attention and central focus in Gunnar MYRDAL's (1939) examination of the temporal nature of the saving-investment process. For the first time, expectations had figured prominently in monetary theory. Monetary equilibrium became rigorously defined by Myrdal and the concept developed into the notion of neutral money. The addition of expectations to the monetary model was an enormous supplement to the saving-investment approach.
The key to understanding the role of money in the business cycle is the divergence of expectation among the different classes of economic agents and individuals themselves.
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Households, as savers and spenders, could make a set of decisions that are not synchronized with firms, as both sellers of output and buyers of inputs, especially labor input. A central factor in their decisions concerns the interest rate, a variable that can diverge from its natural rate because of monetary influences.
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