Instructor : Kim, H.H. Intermediate Macro Analysis Fall 2009 Economics 01:220:321 1Chapter 9. Introduction to Economic Fluctuation In this chapter, you will learn: • facts about the business cycle • an introduction to aggregate demand • an introduction to aggregate supply in the short run and long run • how the model of aggregate demand and aggregate supply can be used to analyze the short-run and long-run effects of “shocks.” Business Cycle Chronology Facts about the business cycle • GDP growth averages 3–3.5 percent per year over the long run with large fluctuations in the short run. • Consumption and investment fluctuate with GDP, but consumption tends to be ___________________ and investment more volatile than GDP. • Unemployment ________ during recessions and ___________ during expansions. • ____________________ : the negative relationship between GDP and unemployment.
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Instructor : Kim, H.H. Intermediate Macro Analysis Fall 2009 Economics 01:220:321 2Growth rates of real GDP, consumption Growth rates of real GDP, consumption, investment Unemployment Percent change from 4 quarters earlier Average growth rate Real GDP growth rate Consumption growth rate Percent change from 4 quarters earlier Investment growth rate Real GDP growth rate Consumption growth rate