Activity: Classroom Experiment

If the price level rises, then real wealth _________, consumption , ____________and aggregate demand __________.

Aggregate income minus taxes plus transfer payments is equal to ____________.

A recessionary gap is the amount by which___________ .

When the economy experiences a combination of recession and inflation, the situation is called____________ .

Read the article and answer the following questions: https://www.forbes.com/advisor/au/investing/stagflation/

i. What is stagflation

ii. Is Australia heading towards stagflation?

iii. What are the examples of stagflation?

iv. What are the current risks of stagflation?

https://theconversation.com/will-global-oil-supply-be-at-risk-if-iran-and-israel-pull-the-middleeast-into-war-228009

i. How concerned should Australia be with regard to rising oil prices?

2 Problem-Solving Questions

1. Define a recession. What are the beginning and end points of a recession? Why is the business cycle a misnomer?

2. Why don't economists know for sure what phase of the business cycle the economy is in at a particular time?