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Macroeconmomics (ECO 203)

Imagine a scenario where there is a decline in aggregate demand.  Identify which part of the business cycle is part of a decline in aggregate demand.  Gross Domestic Product (GDP) measures the amount of new production. A change in the amount of new production affects employment.  Describe what would happen to GDP, the unemployment rate and the inflation rate if there is a decline in aggregate demand. 

Reference: Chapter 6, section 6.3: Aggregate Equilibrium and Changes in Equilibrium.

Guided Response: Review and respond to at least two of your classmates’ posts by discussing this question in terms of how a decrease in aggregate demand impacts GDP, and why the change in GDP affects unemployment

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