ECON 1000 Chapter Notes - Chapter 14: Gdp Deflator, Aggregate Demand, Aggregate Supply
27 views9 pages
29 Nov 2017
School
Department
Course
Professor
Document Summary
Recession: a period of declining real incomes and rising unemployment. Three facts about economic fluctuations: economic fluctuations are irregular and unpredictable. When real gdp grows rapidly, business is good. when real gdp falls during recessions, businesses have trouble: most macroeconomic quantities fluctuate together. Real gdp is the variable that is most commonly used to monitor short run changes in the economy because it is the most comprehensive measure of economic activity. For short run fluctuations, it does not matter which measure of economic activity you choose. Although macroeconomic variables fluctuate together, they fluctuate by different amounts: as output falls, unemployment rises. When real gdp declines, the rate of unemployment rises. Nominal variables may be the first things we see when we observe an economy because economic variables may be the first things seen when observing an economy because economic variables are often expressed in units of money. Whats important is the real variables and the economic forces that determine them.