Assignment:
Business Cycles, Unemployment, and Inflation
Consider the following as you read:
• What are primary phases of the business cycle?
• How does inflation affect the economy's level of real output?
Basic Macroeconomic Relationships
Consider the following as you read:
• How do changes in income affect consumption (and saving)?
• What are factors other than income that can affect consumption
The Aggregate Expenditures Model
Consider the following as you read:
• How can changes in real GDP equilibrium occur in the aggregate expenditures model and how do these changes relate to the multiplier?
• How do economists integrate the public sector (government expenditures and taxes) into the aggregate expenditures model?
Aggregate Demand and Aggregate Supply
Consider the following as you read:
• What is aggregate demand (AD) and why is its downward slope the result of the real-balances effect, the interest-rate effect, and the foreign purchases effect?
• What is aggregate supply (AS) and why does it differ in the immediate short-run, the short-run, and the long-run.