2A. THE LEVEL OF OVERALL ECONOMIC ACTIVITY
The Circular Flow of income can be illustrated in a variety of ways; a water machine, a simulation, a diagram. What needs understanding is that it is the basic foundation of Macroeconomic modeling and like Phillips water machine it is changes to the circular flow and the economic consequences thereof that really illustrate the importance of the model;
| circular_flow_model-2.pptx |
The circular flow of income model
| circular_flow_of_income_lesson.pdf |
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The level of overall economic activity
| measures_of_economic_activity.pdf |
Bobby Kennedy on GDP: 'measures everything except that which is worthwhile'
UK GDP estimate figures are out today. See what Bobby Kennedy said about this data in 1968
The business cycle
WHAT: THE BUSINESS CYCLE
HOW: RESEARCH THE DIFFERENT PHASES OF THE BUSINESS CYCLE AND BE ABLE TO EXPLAIN WHY THEY OCCOUR
WHY: THE BUSINESS CYCLE IS AN IMPORTANT MODEL FOR ECONOMISTS AS IT IS AN INDICATOR OF FUTURE ECONOMIC PERFORMANCE
HOW: RESEARCH THE DIFFERENT PHASES OF THE BUSINESS CYCLE AND BE ABLE TO EXPLAIN WHY THEY OCCOUR
WHY: THE BUSINESS CYCLE IS AN IMPORTANT MODEL FOR ECONOMISTS AS IT IS AN INDICATOR OF FUTURE ECONOMIC PERFORMANCE
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ACTIVITY: Identify on the countries data pages 5 countries that have had fast rates of growth. Identify on the same pages, 5 countries that have had growth rates that have been negative since 1995 or have stagnated for long periods. When were these?
In the second set of data identify 5 periods of time in the USA SINCE 1950 when there have been relatively high rates of growth, what happened to the unemployment rate at this time? What happened to the price level (inflation) during this period? Now do the same exercise for 5 periods of time when the economy was in recession. |
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| the_business_cycle.pdf |
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