ECON 105 Chapter Notes - Chapter 14-15: Aggregate Supply, Aggregate Demand, Price Level
54 views5 pages
13 Apr 2016
School
Department
Course
Professor
tianjin and 38107 others unlocked
17
ECON 105 Full Course Notes
Verified Note
17 documents
Document Summary
Chapter 14: aggregate demand and aggregate supply: recession: a period of declining real incomes and rising unemployment, depression: a severe recession. 3 key facts about economic luctuations: economic fluctuations are irregular and unpredictable. Fluctuations in the economy are often called the business cycle, so they correspond to changes in business conditions. Gdp grows rapidly = business is good. When gdp falls during recessions = businesses have trouble and most irms experience declining sales and dwindling proits: most macroeconomic quantities fluctuate together. For monitoring short-run luctuations, it doesn"t mater what measure of economic activity is used. When real gdp falls in a recession, so do personal income, corporate proits, consumer spending, investment spending, industrial production, retail sales, home sale, auto sales and so on: as output falls, unemployment rises. When irms chose to produce a smaller quantity of goods/services, they lay of workers, expanding the pool of unemployed. Unemployment never approaches 0; instead, it luctuates around its natural rate.