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MACROECONOMICS The Business Cycle
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HOW DOES MACRO DIFFER FROM MICRO? Read the introductory material on pages 211-212 and discuss the following with seat-partners: What hardships resulted from the economic collapse in the Great Depression? How did the Great Depression help create modern macroeconomics ?
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KEY TERMS Macroeconomics Definition: Business Cycle Definition: Relationship The basic purpose of macro economics is ____________. Macro policy tries to __________.
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THREE FUNDAMENTAL QUESTIONS OF THE BUSINESS CYCLE What are business cycles? What damage does unemployment cause? Who is hurt by inflation?
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ASSESSING MACRO PERFORMANCE Three basic measures of macroeconomic performance: Output (GDP) Growth GDP definition: Unemployment Inflation
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GDP GROWTH Production Possibilities Curve Are we producing at or near the production frontier? Are we pushing the frontier outward? Nominal GDP vs. real GDP Nominal GDP: Real GDP:
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GROWTH IS ERRATIC Real GDP increases inconsistently Pattern of steps, stumbles, and setbacks See Figures 10.1, 10.2 Recession: definition: Figure 10.2
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WORK WITH SEAT PARTNER Page 231 Problem #1 (a-c)
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