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Economics, Ch. 27: Business Cycles, Unemployment, and Inflation

Read pages 592-594 of Economics.

Consider the following as you read:

• What are primary phases of the business cycle?
• How does inflation affect the economy's level of real output?

Economics, Ch. 28: Basic Macroeconomic Relationships

Read pages 615-622 and 628-634 of Economics.

Consider the following as you read:

• How do changes in income affect consumption (and saving)?
• What are factors other than income that can affect consumption

Economics, Ch. 29: The Aggregate Expenditures Model

Read pages 638-643 and 646-658 of Economics.

Consider the following as you read:

• How can changes in real GDP equilibrium occur in the aggregate expenditures model and how do these changes relate to the multiplier?
• How do economists integrate the public sector (government expenditures and taxes) into the aggregate expenditures model?
• Economics, Ch. 30: Aggregate Demand and Aggregate Supply

Read pages 661-664 and 670-680 of Economics.

Consider the following as you read:

• What is aggregate demand (AD) and why is its downward slope the result of the real-balances effect, the interest-rate effect, and the foreign purchases effect?

• What is aggregate supply (AS) and why does it differ in the immediate short-run, the short-run, and the long-run?

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