ECON1132 Chapter Notes - Chapter 7: Aggregate Demand, Business Cycle, Hyperinflation
Document Summary
Chapter 7 business cycle and aggregate demand. Keynesian economics states that changes in aggregate demand can have powerful impacts on the overall levels of output, employment, and prices in the short run. Business cycles economy-wide fluctuations in total national output, income, and employment over a period of 2-10 years marked by widespread expansion or contraction. Recession a recurring period of decline in total output, income, and employment lasting from 6 to 12 months and marked by contractions in many sectors of the economy. A large scale recession is called a depression. Investment falls sharply, with usually housing declining first. Consumers purchase less and businesses slow production, so gdp falls. Exogenous theories find sources of the business cycle in the fluctuation of factors outside the economic system (wars, revolutions, elections) Internal theories look for mechanisms in the economic system. Hyperinflation occurs when prices ride at 100% or more per month.
