ECON 1BB3 Lecture Notes - Lecture 14: Aggregate Demand, Price Level, Money Supply
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27 Apr 2016
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ECON 1BB3 Full Course Notes
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Economic fluctuations are irregular and unpredictable: responds to changes in business conditions, business cycle expansion (boom) and recession. Economic variables tend to fluctuate together: when gdp falls, unemployment rises, when gdp falls, price levels fall. Recession: two consecutive quarters (6 months) of declining real gdp, movement from a peak to a trough. Expansion: movement from a trough to a peak. Slow growth period: a inflection point, between a trough and a peak. Used to explain short run fluctuations in economic activity: around its long run trend, vertical axis price level, horizontal axis real gdp. The quantity of goods firms produce: at each price level. The quantity of goods households, firms and the government buy: at each price level. Change in quantity demanded/supplied: movement due to a change in price. Change in demand/supply: shift due to change in other factors. Change in quantity at any given price level: means a shift in curve.
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