Transcript Module 2

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Introduction to Macroeconomics
*Goes up during….
*Goes down during ….
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*What is a business cycle ?
*How are employment and unemployment
measured and how do they change over the
business cycle?
*Define aggregate output and how does it change
with the business cycle?
*What is the meaning of inflation and deflation
and why do we prefer price stability?
*How does economic growth determine a
countries standard of living?
*Why do models play a crucial role in economics?
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*Economic Upturns and Downturns
*The time of recession to expansion
and back to recession
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*Employment is the total number of people
currently working for pay.
*Unemployment is the total number of people
who are actively looking for work but aren’t
currently employed.
*During recession unemployment rates
generally rise, during expansion they
generally fall.
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*The economy’s total production of
goods and services for a given time
period, usually a year.
*Aggregate output falls in a recession,
rises during expansion.
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*Inflation – rise in the overall price level
*Deflation – a fall in the overall price level.
*Inflation discourages people from holding cash,
Deflation more attractive to hold on to cash.
*We want price stability because it keeps the
economy stable.
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*Economic growth allows for higher
wages which allows people to afford
more of what they want and “need”
thus a rising standard of living.
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*Models are important to economics
because they allow us to make situations
more simple so we can focus on analyzing
one change at a time.
*Ceteris Paribus – Other things equal
assumption.
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