In order to reduce unemployment and increase GDP, counterfieters should not be prosecuted

1. Wages and Prices are sticky I will first explain that wages and prices are "sticky". Sticky in this context refers to the snowiness of prices and wages to change due to a disruption in equilibrium. A disruption in equilibrium can include changes in savings rate, and an increase of economic growth. Wages are sticky due to a variety of factors. A main contributor is our inability to think of currency in nominal terms instead of real terms. For example, many people see a 2% cut in nominal income as fair yet see a 2% raise in nominal income whereas a 4% income is seen as fair[1]. Another reason for this occurrence is contract obligations. Contracts can require a person to receive a fixed salary or receive a good or service at a fixed price. Often these contracts do not take into account changes in deflation or inflation. Third reason for this occurrence is oligopoly competition (a few producers, let's say they produce similar but slightly different material). Firms will not raise there prices above Po, since a small increase in prices will cause consumers to flow to the other businesses. However, firms will not lower prices below Po, since other producers will respond the same way. This creates stickiness, since a company will only increase prices if expenses are really high or if expenses are really low. Final reason is due to "menu costs". Basically businesses will be reluctant to change prices since it will actually cost them to change the price level. They will have to change their advertisement fliers, the cost of a menu, and accountant costs. The result is that since it costs money for a business to change its prices, it will be more affordable for the business to keep prices the same. 2. MV = PY In brief this equation states that the money supply times the velocity of money is equal to the price index times the gross domestic production. As stated earlier, prices are sticky. Therefore an increase in the money supply will not cause a proportional increase in the price index (Ex: doubling the money supply will not double prices). This means that through increasing the money supply, one can actually increase the Gross Domestic Production. I have now fullfilled my first burden, to show that an increase in the money supply will cause an increase in gross domestic production. It is easy to see how a counterfeiter will increase the money supply in the economy. That's what a counterfeiter does. 3. The Philips Curve The Philips Curve is a historical trend and empirical evidence that demonstrates that as inflation increases, unemployment decreases[2]. There are many possible reasons for this occurrence. One is the historical relationship between GDP and employment. This is known as Okun's law. [3] It is quite possible that as GDP increases due to price stickiness, it causes firms to hire more people and more people are put to work. Another reason for this phenomena is, as stated earlier, the prices of wages are also sticky. Since employers are able to obtain a 'cheaper deal' through wage stickiness, the firm has the ability to hire more people. Contrast to if deflation occurs, then employers have to pay employees too much, and as a result lay off occurs. Conclusion: I have successful shown how counterfeiting increases GDP and reduces unemployment. In fact, since the two are correlated through Okun's law, If I can demonstrate that one occurs, then it is likely the other has occurred as well. I look forward to my opponent's response. . http://ideas.repec.org...[1] . http://www.econlib.org...[2] . http://en.wikipedia.org...[3]