EC140 Chapter Notes - Chapter 19: Potential Output, Output Gap, Business Cycle

• School: WLU
• Department: Economics
• Course: EC140
• Professor: All

Document Summary

Macroeconomics: study of how the economy behaves as a whole. Macroeconomists consider two diferent aspects of the economy: short-run behaviour of macroeconomic variables. How does government policy inluence these variables. The study of business cycles: long-run economic growth. Explaining how investment and technological change afect our material living standards over long periods of ime. One of the most important ideas in economics is the producion of goods and services that generate income. The value of naional product by deiniion is equal to the value of naional income. Nominal naional income: total naional income measured in current dollars: calculated by muliplying the number of units of each good produced by the price at which each unit is sold. One of the most commonly used measures of naional income is called gdp. Gdp can be measured in either real or nominal terms we focus on real gdp. Recession: a period where there is a fall in the level of real gdp.