Lecture_Economics_Notes_5-4-2010

Lecture_Economics_Notes_5-4-2010 - Lecture Notes Chapter 23...

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Lecture Notes Economics T-Th A. Ordonez Chapter 23 809-195-3K1C 5/4/10 Chpt. 23 Aggregate Demand & Aggregate Supply Short-Run Economic Fluctuations o Economic activity fluctuates from year to year. In most years production of goods and services rises. On average over the past 50 years, production in the U.S. economy has grown by about 3 percent per year. In some years normal growth does not occur, indicating a recession. Short-Run Economic Fluctuations o A recession is a period of declining real incomes, and rising unemployment. o A depression is a severe recession. THREE KEY FACTS ABOUT ECONOMIC FLUCTUATIONS 1. Economic fluctuations are irregular and unpredictable. Fluctuations in the economy are often called the business cycle. These fluctuations do not follow regular or easily predictable patterns. 2. Most macroeconomic variables fluctuate together. Most macroeconomic variables that measure some type of income or production fluctuate closely together. Although many macroeconomic variables fluctuate together, they fluctuate by different amounts.
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