ECON 105 Chapter Notes - Chapter 19: Unemployment, Output Gap, Potential Output

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Seong- Jun Choi

Document Summary

Macroeconomists consider 2 different aspects of the economy: short run behavior of macro variables; ex. Output, employment, inflation, and how the government can influence them leads to business cycles: economic growth long run path of the short-run variables as the nature of long run economic growth. A full understanding of macroeconomics requires understanding the nature of short-run fluctuations as well. 2 groups of researchers: one that focuses on micro econ that build models populated by workers and consumers etc. (optimizers) that lead to their total consumption, leading to aggregated totals. Assume wages/salaries are flexible: another that just focuses on the aggregated totals. Assume wages/salaries are slow to adjust being in disequilibrium for a while. A nation"s overall level of economic activity is the value of the total production of goods and services national. One of the most important ideas in economics is that the production of goods and services generates income output or output.