Explain economic fluctuations and how shifts in either aggregate demand or aggregate supply can cause expansions and recessions using the model of aggregate demand and aggregate supply. Question 1- Three Key Facts

Explain economic fluctuations and how shifts in either aggregate demand or aggregate supply can cause expansions and recessions using the model of aggregate demand and aggregate supply.
Question 1- Three Key Facts

Identify the three key facts about short-run economic fluctuations and how the economy in the short run differs from the economy in the long run. Provide real-world examples of those “key facts.”

According to Mankiw (2015), those three key facts include:

Economic Fluctuations Are Irregular and Unpredictable.

Most Economic Quantities Fluctuate Together.

As Output Falls, Unemployment Rises. (pp. 316-318)

For example, according to the Bureau of Labor Statistics (2016), from December 2007 to 2008 the unemployment rate rose from 5.0 to 7.3, and, according to the Bureau of Economic Analysis (2016), GDP fell 0.3 percent.

Class – How does the economy in the short run differ from the economy in the long run? What real-world examples do you have of the three key facts posted in the above list?

Question 2- Shifts in AS and AD

Explain economic fluctuations and how shifts in either aggregate demand or aggregate supply can cause expansions and recessions using the model of aggregate demand and aggregate supply.

In the two threads, I have posted in response to this message, let’s consider the factors that cause shifts in aggregate supply and aggregate demand . . .

Question 3- Why is unemployment a lagging indicator?

Patricia’s comments were related to the assertion by Mankiw that “as output falls, unemployment rises” (Mankiw, 2015, p. 318). The relationship between output (GDP) and the unemployment rate is clearly shown in the graphs in Chapter 20. In addition, if you take a close look at the relationship between output and unemployment, you will see that unemployment is a lagging economic indicator.

Class — What is the definition of a lagging economic indicator? Why is unemployment a lagging indicator? What behavior explains why unemployment a lagging indicator?

Question 4 – Shifts in Aggregate Supply

Hello, Everyone – According to our course text, Mankiw (2015), factors that might increase or decrease GDP from the supply side (aggregate supply) include changes in:


 


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