ECO 1102 Lecture Notes - Lecture 8: Macroeconomics, Nominal Rigidity, Aggregate Supply

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ECO 1102 Full Course Notes
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ECO 1102 Full Course Notes
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Recession: a period of falling incomes and rising unemployment. The variables that we study in this chapter are largely those we have already seen in previous chapters. Gdp unemployment interest rates exchange rates prices. The model of aggregate demand and aggregate supply is oten used by economists to analyze short-run luctuaions in the economy. Fact 1: economic luctuaions are irregular and unpredictable. Describing the paterns that economies experience as they luctuate over ime is easy. Explaining what causes these luctuaions is more diicult. The classical view is someimes described by saying, money is a veil . It is relevant in the short run not necessarily the real long run. What is important, however, are the real variables and the economic forces that determine them. Most economists believe that classical theory describes the world in the long run but not in the short run. To understand how the economy works in the short run, we need a new model.

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