ECON202 Lecture : Chapter 9 Notes Here are the notes taken in Joseph De Juan's class for Chapter 9 for those who didn't attend.
16 Oct 2011
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Document Summary
How the short run differs from the long run. An introduction to aggregate supply in the short run and long run. How the model of aggregate demand and aggregate supply can be used to analyze the short run and long run effects of shocks . Gdp growth averages 3-3. 5% per year over the long run with large fluctuations in the short run. Consumption and investment fluctuate with gdp, but consumption tends to be less volatile and investment more volatile with gdp. Unemployment rises during recessions and falls during expansions. Okun"s law: the negative relationship between gdp and cyclical unemployment. Change in the unemployment rate = -0. 5 (% change in real gdp - 4) Aims to forecast changes in economic activity 6-9 months into the future. Used in planning by businesses and government, despite not being a perfect predictor. Yield spread (long term minus short term) on treasuries. Prices are flexible, respond to changes in supply or demand.
