Why Economist Disagree 1.Read: Name the reasons why economist might disagree 2.Read: Define the arguments of Value-Added Tax 3.Write: Do you believe we should trust Economist to make economic decisions

Example: i think we should trust those guys because they know stuff i don’t know stuff and they do they went to skool and things like that

Module Introduction to Macroeconomics 2

What you will learn in this Module : What a business cycle is and why policy makers seek to diminish the severity of business cycles How employment and unemployment are measured and how they change over the business cycle The definition of aggregate output and how it changes over the business cycle The meaning of inflation and deflation and why price stability is preferred How economic growth determines a country's standard of living Why models - simplified representations of reality- play a crucial role in economics Key Terms Business Cycle Depression Recession Expansion Employment Unemployment Labor Force Unemployment Rate Output Aggregate Output Inflation Deflation Price Stability Economic Growth Model Ceteris paribus(all things being equal)

The Business Cycle Short Term Alterations between downturns and upturns Recession National Economic Downturn Expansion National Economic Upturn Depression National Long term Economic Downturn

Labor force Total of Employed & Unemployed Unemployment rate % of Labor forced unemployed Employment & Unemployment (E) Employment: Total people working for pay (U) Unemployment: % of Labor force not employed but actively seeking

Calculate Labor Force & Unemployment Rate Labor Force= E + U Example= (E)100 + (U) 20 = 120 Unemployment Rate % = 100 X (U) / (LF) Example= 100 X (20 / 120) =100X.1666= 16.66%

Aggregate Output and the Business Cycle Output Quantity of goods and services produced Aggregate Output Total Output for one year

Inflation, Deflation, and Price Stability Nominal income Money in your pay check Inflation “Rise in Prices” Deflation “Falling Prices” Price Stability Slow Rising Prices Real income Income after Adjusted for Inflation

Economic Growth Standards of living: level of wealth, comfort, material goods and necessities available to a certain socioeconomic class in a certain geographic areawealth Economic growth: Increase in level of production produced

The Use of Models in Economics Models: Simplified Measure of to understand real-life (Ceteris Paribus) Other things being equal