Intermediate Macroeconomics Ch1 notes

Intermediate Macroeconomics Ch1 notes - Chapter 1:...

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Chapter 1: Introduction Reconsider the meaning of Macroeconomics It deals with the economy as a whole, abstracting the differences between various subjects in the market. Aggregating the essences of a single market could help to understand its interactions with the other group. However, it is at the cost of missing certain information. Time Horizon in Economics Short Run It is a very short period of time. There would be a lot of fluctuations in output and the aggregate supply curve is flat. It also means that some of the factors in the economy cannot be changed. Medium Run This is situated in-between short run and long run in which the aggregate demand curve is downward sloping while the aggregate supply curve is upward sloping. Long Run It refers to a very long period of time. In the long-run, output would be supply dominated since all the fluctuations on the demand side would average out each other. It is also the domain where the growth theory situated. In fact, long-run also means
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Intermediate Macroeconomics Ch1 notes - Chapter 1:...

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