EC140 Chapter Notes - Chapter 19: Business Cycle, Longrun
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Chapter 19 what macroeconomics is all about. Macroeconomics: the study of the determination of economic aggregates and averages, such as total output, total employment, the price level, and the rate of economic growth and how they may be influenced by government policy. Study of how the economy behaves in broad outline without dwelling on much of the detail that occurs in markets for individual products. When aggregate output rises, the output of many commodities and the incomes of many people rise with it. When the unemployment rate rises, many workers suffer reductions in income. When significant disruptions occur in the credit markets, interest rates rise and borrowers find it more difficult to finance their desired purchases. These movements influence the health of industries in which people work. Assumed to represent the behaviour of many firms and consumers: assume wages and prices are slow to adjust, and thus markets can be in disequilibrium for longer periods of time.
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