ECON102 Study Guide - Final Guide: Aggregate Supply, Aggregate Demand, Demand Curve
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29 Sep 2016
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Chapter 14: aggregate demand and and aggregate supply most economists use the model of aggregate demand and aggregate supply to analyze short run uctuations ! Fact 1: economic fluctuations are irregular and unpredictable ! Uctuations in the economy are often called business cycles - economic uctuations correspond to changes in business conditions ! Gdp grows, business is goods, customers are plentiful, pro ts growing ! Gdp falls, businesses have trouble, declining sales and dwindling pro ts ! economic uctuations are not at all regular, almost impossible to predict with much accuracy ! Fact 2: most macroeconomic quantities fluctuate together! for short-run uctuations, does not really matter which measure of economic activity is used ! most macroeconomic variables that measure some type of income, spending, or production. Uctuate closely together ! may uctuate together, but by different amounts ! when economic conditions deteriorate, much of the decline is attributable to reductions in spending on new factories, housing, and inventories !