warm-up: get a yellow text 1.what does gdp stand for? 2.how do we calculate gdp? 3.what do we use to...
Post on 21-Dec-2015
217 Views
Preview:
TRANSCRIPT
Warm-up: Get a yellow text
1. What does GDP stand for?
2. How do we calculate GDP?
3. What do we use to measure inflation?
4. How do we measure unemployment?
Begin Unit 3 Macroeconomics
SSEMA1
b. Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and aggregate supply and aggregate demand.
c. Explain how economic growth, inflation, and unemployment are calculated.
N.B. #25- Economic Indicators• Add the new vocab words to your list• Read and take 2-column notes on Lesson
9 (pp.72-77) of the EOCT Coach• Be sure to answer the following questions
in your notes:
1.How are GDP, the CPI, and the unemployment rate calculated?
2.What are the characteristics of the four types of unemployment?
Question 1What type of unemployment?
• Construction workers are laid off for the winter, but plan to return to work when the weather is better.
Question 2What type of unemployment?
• Workers are laid off at a Pog factory. A downturn in the economy has lowered demand for luxury items.
Question 3What type of unemployment?
• The United States has lost manufacturing jobs as a result of a change to a service-oriented economy.
Question 4What type of unemployment?
• A fast-food worker graduates from college and quits his job to look for a better career.
Quiz!!1. In your own words, describe what
GDP attempts to measure.
2. Explain the formula for calculating GDP.
Naked Econ
Read from the bottom of p. 177-the top of p. 181
1. Why do dollars have value?2. What is the best way to think about
inflation?3. What does it mean if I receive 5%
interest in an investment while the inflation rate is 3%?
The Business Cycle
• The ups and downs of the economic activity
• The good times and bad times
• P. 310
The Business Cycle
4 phases1. Expansion- increasing
GDP and growth
2. Peak- the top of the expansionary period- lowest unemployment
3. Contraction- decreasing GDP-increasing unemployment
4. Trough- “the bottom” of the contraction
The story of Peorgia
• Work with a partner who has the same numbered handout as you do.
• Calculate all the economic indicators for Peorgia
• We will work with this more soon!
The story of Peorgia
• Work with your group to determine which phase of the business cycle Peorgia is in
• Create a skit involving all group members that shows what life might be like during this phase of the bussiness cycle.
Key learning: When aggregate demand is equal to aggregate supply at a level that just employs all available productive resources with no change in price level, the economy is at full-employment, non-inflationary equilibrium
Aggregate Supply Determinants
1. Cost of inputs (ex.the cost of oil falls!)
2. Productivity (ex. we get better computers!)
3. Government regulations (ex. We have to spend money to clean up pollution!)
Aggregate Supply Shifters:
Change in cost of inputs (domestic or imported)Change in productivityGovernment regulations
AS1 AS2
Price levelPrice level
OutputOutput
Aggregate Demand Shifters:
Change in Consumer SpendingChange in Investment SpendingChange in Government Spending
P
AD1 AD2
O
Price levelPrice level
OutputOutput
Aggregate Supply and Demand and the Business
Cycle• Complete the chart on your paper• For AD and AS, predict if there will be
an increase, a decrease, or no change.• Also, state if the curve will shift to the
right or to the left.
Aggregate Supply and Demand and the Business
Cycle
We can try to stimulate the economy by manipulating the AD and AS curves.
When AD is below full-employment production falls and unemployment results
AS
P
AD
O
Price levelPrice level
OutputOutput
Aggregate Supply and Demand and the Business
Cycle
We want to move the curves back to the full-employment non-inflationary equilibrium!
How Can We Shift the Curves and Help (Hopefully) the
Economy?
Two Tools:
1. Fiscal Policy
2. Monetary Policy
Warning!!!
• Cost-Push Inflation: Rise in the price level due to increase in costs of production (shifts agg.supply curve left).
Cost-Push Inflation
AS2
AS
P2
P
AD
O2 O
Price levelPrice level
OutputOutput
Equilibrium!Equilibrium!
The Business Cycle
1. Be sure to label all points on the B. C. graph
2. During which phase is production increasing?
3. During which period is unemployment likely to be lowest? Why?
top related