ECO 1102 Lecture Notes - Lecture 14: Exchange Rate, Aggregate Supply, Aggregate Demand

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: David Gray

Document Summary

Feel free to take off the color coding by highlighting it all (ctrl + a) and changing it all to black. In this chapter we return to the market for goods and services. Real gdp fluctuates, usually growing but at uneven rates. The ad-as model determines equilibrium real gdp and explains its fluctuations. # 1 real gdp has its ups and downs that comprise the business cycle, but this cycle is not regular (like the seasons) We had experienced about 15 straight years of growth in real gdp in canada. 1993-2008 were good, 1999-2000 was extremely good. Recession = period of contracting real gdp and rising unemployment. # 2 many macroeconomic aggregates (real gdp, c+i+g+nx) move together, tend to be positively correlated, although not necessarily by the same magnitude. # 3 as real gdp falls even slightly, unemployment skyrockets. By mid-2009, the economy had shrunk about 3. 5 % points from its peak, but by.