ECON 102 Lecture 12: 10.20.16.
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ECON 102 Full Course Notes
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Business cycle fluctuations - when the firms are above or below the growth trend. When the economy"s resources are used at thri natural rates, the economy is on its long-run growth path. Cyclical unemployment is positive when the cycles are below the trend. Assumptions applied quantity supplied at this fixed price in the short-run. Sticky price assumption - aggregate price level p is fixed, and producers are willing to increase. No government: g = t = tr = 0. Quantity of money m in the economy is fixed. No international trade: ex = im = nx = 0. Autonomous spending - spending that is unrelated to the variables explained by our model. How much money you have in your pocket is held constant. Inheritance of million which must be spent on autonomous spending. Unrelated to anything else in the system. D - money that is disposable that you can do what you please (after taxes)
