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Unit 2: Macro Measures and International Trade

Unit 2: Macro Measures and International Trade. 1. THE BUSINESS CYCLE. Define Macroeconomics What are the 3 economic goals that all countries have Identify the 3 key parts of the definition of GDP How do we use GDP Identify w hat is NOT included in GDP List the 4 components of GDP

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Unit 2: Macro Measures and International Trade

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  1. Unit 2: Macro Measures and International Trade 1

  2. THE BUSINESS CYCLE

  3. Define Macroeconomics • What are the 3 economic goals that all countries have • Identify the 3 key parts of the definition of GDP • How do we use GDP • Identify w hat is NOT included in GDP • List the 4 components of GDP • Define Inflation • Explain the difference between Nominal and Real GDP • Explain Real GDP per Capita • Name 10 Disney Movies

  4. Paul Solman Video: The Roller Coaster Ride 4

  5. THE BUSINESS CYCLE The national economy fluctuates resulting in periods of boom and bust. Inflation Unemployment Full employment A Recession is 6 month period of decline in output, income, employment, and trade. (If really bad…then depression)

  6. 200 Years of the Business Cycle • Why is the business cycle like a roller coaster? • How do wars affect the economy?

  7. The Business Cycle Why does the economy fluctuate? • Retailer and Producers send misleading information about consumer demand. • Advances in tech, productivity, or resources. • Outside influences (wars, supply shocks, panic). Who cares? • Macroeconomics measures these fluctuations and guides policies to keep the economy stable. • The government has the responsibility to: • Promote long-term growth. • Prevent unemployment (resulting from a bust). • Prevent inflation (resulting form a boom).

  8. 2010 GDP Growth Rate= 2.8%

  9. What is Economic Growth? • An increase in real GDP over time • An increase in real GDP per capita over time (usually used to determine standard of living) • Why is economic growth the goal of every society? • Provides better goods and services • Increases wages and standard of living • Allows more leisure time • Economy can better meet wants

  10. Connection to PPC • The same information shown on the business cycle can be shown on a production possibilities curve. • Full employment • Unemployment • Inflation • The shifters of the PPC affect GDP • Change in quantity/quality of resources • Changes in technology • Changes in trade

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