ECON 2002.01 Lecture 5: Macro - The Big Picture

• School: Ohio State University
• Department: Economics
• Course: ECON 2002.01
• Professor: Darcy Hartman

Document Summary

5. 1 growth of real gdp and business cycles. Business cycle - the economy"s pattern of expansion, then contraction, then expansion again. Nominal gdp - the total value of final goods and services for a particular period valued in terms of prices for that period. Real gdp - the total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices i. ii. Only final goods and services included in gdp. Flour to make pizza would not be included. Used to determine whether the economy of a nation is growing or shrinking in size. If we don"t adjust prices, we don"t know if total changed because output changed, prices changed, or both. Phases of the business cycle i. ii. iii. iv. Expansion - when real gdp is increasing for a sustained period. Peak - division between expansion and recession; top.