ECN 204 Lecture Notes - Lecture 11: Foreign Exchange Market, Aggregate Supply, Aggregate Demand
Document Summary
Readings: chapters 14 (please read the related topics from other introductory level of macroeconomics textbooks for your own benefits). You have to make your own note from lecture. In this chapter, look for the answers to these questions: Over the long run, real gdp grows about 2% per year on average. In the short run, gdp fluctuates around its trend. Recessions: periods of falling real incomes and rising unemployment. Short-run economic fluctuations are often called business cycles. Three facts about economic fluctuations: fact 1, fact 2, fact 3: Explaining these fluctuations is difficult, and the theory of economic fluctuations is controversial. Most economists use the model of aggregate demand and aggregate supply to study fluctuations. This model differs from the classical economic theories economists use to explain the long run. The classical dichotomy, the separation of variables into two groups: real quantities, relative prices, nominal measured in terms of money.
