mr. melkonian

thursday, april 9 :D

we still use it as a benchmark for economic well being

see if economy is creating new jobs

low unemployment-expansion+recovery

gradually trending upwards though...

due to globalization

people aren't as urgent

people replaced by machines

people smartening up to the difference

people pretty much free to leave whenever

contraction lasts longer than 6 months (2 business quarters)

first part of expansion (getting out of trough)

excessive increase in consumer demand, relative to aggregate production

passing down of increasing operating costs form producer to consumer

expansion (tax cuts, more govt. spending) - high inflation

contraction (raise taxes, cut spending) dropped inflation

they fix each other eventually... or...

aggregate production slows and both unemployment and inflation increase

Aggregate supply not keeping pace with aggregate demand