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Department of Professor: Rapach Summer 2009 ECON 312 Intermediate Macroeconomics Chapter Outline for “Chapter 9—Introduction to Economic Fluctuations,” N. Gregory Mankiw, Macroeconomics, Sixth edition ( 9-1 The Facts About the Business Cycle GDP and Its Components See Figure 9-1
See Figure 9-2
Unemployment and Okun’s Law See Figure 9-3
See Figure 9-4
Leading Economic Indicators 9-2 Time Horizons in Macroeconomics How the Short Run and the Long Run Differ In the long run, prices are flexible and can
respond to changes in supply or demand. In the short run, many prices are
“sticky” at some predetermined level.
CASE STUDY: The Puzzle of Sticky Magazine Prices
The Model of Aggregate Supply and Aggregate Demand 9-3 Aggregate Demand The Quantity Equation as Aggregate Demand M × V = P × Y
M/P = (M/P)d = k × Y
See Figure 9-5
Why the Aggregate Demand Curve Slopes Downward Shifts in the Aggregate Demand Curve See Figure 9-6 9-4 Aggregate Supply The Long Run: The Vertical Aggregate Supply Curve See Figures 9-7 and 9-8
The Short Run: The Horizontal Aggregate Supply Curve See Figure 9-9 and 9-10
From the Short Run to the Long Run Over long periods of time, prices are flexible,
the aggregate supply curve is vertical, and changes in aggregate demand affect
the price level but not output. Over short periods of time, prices are sticky,
the aggregate supply curve is flat, and changes in aggregate demand to affect
the economy’s output of goods and services.
See Figures 9-11 and 9-12
CASE STUDY: Gold, Greenbacks, and the Contraction of
the 1870s 9-5 Stabilization Policy Demand shock
Supply shock
Stabilization policy
Shocks to Aggregate Demand See Figure 9-13
Shocks to Aggregate Supply See Figures 9-14 and 9-15
CASE STUDY: How OPEC Helped Cause Stagflation in the
1970s and Euphoria in the 1980s 9-6 Conclusion Questions for Review: 1, 2, 4, 5 Problems and Applications: 3 (b) |
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Disclaimer: pages.slu.edu is a service of Saint Louis University, Saint Louis University does not control, monitor or guarantee the information contained in these sites. For more information » |