General Outline of Unit - Econ 4.3 Friday February 5 1999...

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Econ 4.3 Friday, February 5, 1999 Announcements: The online quizzes are up on the webpage. They are worth a maximum of 10 points each. You need a 70% or higher to get the points and you can take it up to three times. Lecture notes: General Outline of Unit Circular Flow of Income o Withdrawals, Injections Macroeconomic Roots o The Great Depression Classical Model Marxist Challenge Keynesian Challenge Aggregate Output o Gross Domestic Product (GDP) Business Cycles o Recession o Expansion o Historical Record Other Macroeconomic Vital Signs o Unemployment o Inflation Macroeconomic Analytic Model o Aggregate Demand (AD) o Aggregate Supply (AS) Circular Flow of Income (continued) Withdrawals (W) and Injections (J)
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Condition Effect on Economy W Desired = J Desired Equilibrium W Desired > J Desired Economy Contracts W Desired < J Desired Economy Grows Aggregate Output (GDP) o The dollar value of all final goods and services produced
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Unformatted text preview: o Final Good: a product which is ready to be used by consumers • Two Key Characteristics of GDP o It grows over time o It fluctuates as it grows • An Economic Rollercoaster o Economic Output o Economic Growth Rate Inflation Rate o Rise in general price level o Unemployment rate Video: Unemployment and the Great Depression • As economic growth decreases, unemployment increases • Keynesian Explanation: first to explain why the economy goes into recession and stays there • Business Cycles o Cyclical movements in output, prices and unemployment o Business cycles differ • The Typical Course of Business Fluctuating (see page 127 in text) • Recession o Growth rate of GDP falls o Firms decrease production o Unemployment Rises • Expansion o GDP growth rate rises o Firms increase production o Unemployment Falls...
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