ECON 104 11th Edition Lecture 9 Outline of Last Lecture I Aggregate Supply II Aggregate Demand III Market Supply IV Market Demand V Business Cycle a Four Stages Outline of Current Lecture I Business Cycle a The Trough II Keynes a Say s Law and Classical Economists b Keynes Assumptions Current Lecture 1 Business Cycle The government tries to smooth out the Business Cycle that s why politicians are elected into office The Federal Government s step and or place during a downturn Recession are to lower interest rates in order to increase keep up investment borrowing money a The Trough i Low Interest Rate ii High Unemployment iii Low Capacity Utilization These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute iv Compliant Labor Force 1 Low Wages Stable Wages When Unemployment falls more skilled workers are hired o Prices start to increase o It becomes more expensive to put out more output 1 Keynes Considered the greatest Economist of the 20th Century His eyes have fundamentally affected the theory and practice of Macroeconomics a Say s Law Supply creates its own Demand or in different terms the controversial assertion found in classical economics that aggregate production necessarily creates an equal quantity of aggregate demand i Classical Economists believed in this idea Keynes idea was that the Federal Government should step in and stimulate the economy b Keynes Assumptions i Prices are Fixed ii Interest Rate is Given iii No Government No Taxes iv Closed Economy
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