1. Mr. Bernstein Module 2: Introduction to Macroeconomics January 2017
AP Economics
Mr. Bernstein
Module 2:
Introduction to Macroeconomics
January 2017

2. AP Economics Mr. Bernstein
The Business Cycle
Recession
Trough
Recovery
(Aka Expansion)
Peak
Depression
Relationship to
PPC Curve (Reff)

3. AP Economics Mr. Bernstein
Employment, Unemployment and Business Cycles
BLS surveys 60,000 households each week
“Employed” = 1 paid hour or 15 unpaid
“Unemployed” = not working AND actively looked for work within the past four weeks
Labor Force
LF = E + U
Unemployment Rate = U / LF (expressed as a %)
UR does not capture those not seeking work

4. AP Economics Mr. Bernstein
Aggregate Output
Economy’s total production of goods and services for a given time period, usually a year
Closely related to employment
In a weak economy or recession, firms cut production, lay off workers; in a strong economy firms raise production and hire workers
Long-term Economic Growth
Distinguish between long-term growth trend and acceleration during recovery periods

5. AP Economics Mr. Bernstein
The Use of Models in Economics
Economists use scientific
methods to test theories
Ceteris Paribus:
all other things equal