1. Capital accumulation with a fixed rate of investment. Total investment (capital) grows until new investment plus natural growth from existing investment just equals depreciation of capital stock. The inflow equals the outflow.

2. (1+r-d)I t I t+1 =(1+r-d)I t + I N I t+1 ItIt (1+r)I t I t = I t+1 so (d-r)I t = I N

3. (1+r-d)I t I t+1 ItIt (1+r)I t I t = I t+1 so (d-r)I t = I N L K

4. Supply side adjustments in response to a fall in aggregate demand.

5. inventory buildup labor required to meet new demand prices fall to unload inventory falling prices stimulate demand and increase real wages causing unemployment unemployment causes money wages to fall to return to potential GDP aggregate demand falls

6. Supply side adjustments in response to an increase in aggregate demand.

7. inventory depletion labor required to meet new demand prices increase due to reduced inventory increasing prices reduce demand and decrease real wages causing over employment over employment causes money wages to increase to return to potential GDP aggregate demand increase