Warm up: Quick Write 1. Why was President Hoover blamed for the Great Depression? 2. What is the NBER and its function? 3. Do economists agree or disagree on the definition of when recessions and expansions begin and end? Why or why not?

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Warm up Quick Write1. Why was President
Hoover blamed for the Great Depression?2. What
is the NBER and its function?3. Do economists
agree or disagree on the definition of when
recessions and expansions begin and end? Why or
why not?
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ModuleIntroduction toMacroeconomics
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• KRUGMAN'S
• MACROECONOMICS for AP

Margaret Ray and David Anderson
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What you will learnin 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

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The Business Cycle

• Business Cycle alternation b/w economic
  downturns and upturns in the macroeconomy.
• Contraction economy begins to slow- uptick in
  unemployment
• Trough Bottom of the cycle can be recession or
  depression.
• Depression Deep recession, high unemployment,
  depressed output, can have high inflation
• Recession Unemployment is high, economic growth
  is anemic, growth under or at 2.
• Expansion Economy begins to expand, employment
  picks up.

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Employment, Unemployment, and the Business Cycles

• Employment Anyone who did work for pay or profit
  during the survey week. All who did at least 15
  hrs. of unpaid work in a family-operated bus.
• Unemployment All who did not have a job at all
  during the survey week and are actively looking,
  made efforts to find a job during the 4 wks. and
  were able to work .Anyone laid off.
• Labor force LFE U
• Unemployment rate Calculated by random survey of
  60,000 households nationwide. Selected so as to
  be representative of the entire countrygt
  Percentage of labor force that is not employed.
  UR 100x(U)/(LF)

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Aggregate Output and the Business Cycle

• Output What an individual company can produce.
• Aggregate Output The economys total production
  of goods and services for a given time period.
  Usually a year.
• Closely related to employment.
• When economy is weak, fewer goods and services
  are produced, firms lay off workers.
• What happens when economy is strong?

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Inflation, Deflation, and Price Stability

• Nominal income v. Real income
• Inflation Inflation, a rise in the overall price
  level
• Deflation a fall in the overall price level
• Price Stability

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Economic Growth

• Standards of living
• Economic growth

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The Use of Models in Economics

• Models simplified version of reality used to
  understand a concept..
• Hypotheses formulations of explanations of cause
  and effect. Testing and acceptance or rejection,
  or modification of the hypotheses.
• Other things equal assumption
• Ceteris Paribus

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• http//www.econclassroom.com/?sBusinesscyclesub
  mitSearch

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• http//www.bls.gov/cps/cps_htgm.htm