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Principles of Macroeconomics Unit 4
Transcript of Principles of Macroeconomics Unit 4
Then click on "GDP",
then "Percent change
from preceding period"
What causes recessions?
The Great Depression
Stock market boom
Many borrow to buy stocks
Loan foreclosures, bankruptcies, savings gone
1926: buy $1,000 ($100 own money; $900 borrowed)
1927: stocks worth $1,300. Profit: $300. Yay!
1928: stocks worth $1,700. Profit: $400. Yay!
1929: market crashes. Stocks worth $600. Unable to pay back loan. :(
No job and looking for one
Types of unemployment
Then click on "Subject Areas" and
select national or state, etc. rate.
The "full employment rate",
or "natural rate of unemployment"
is when unemployment is around
5 - 6%.
Keynesian economists: government should stimulate the economy (print money, increase spending) if the rate is above 6%.
Classical economists: government stimulation may help in the short run, but causes economic harm in the long run.
Unemployment around the world: