Section 3: Economic Fluctuations

Most economies exhibit positive long-run growth in output (in the UK we are used to GDP growth of 2-3% per annum). However, most economies also experience strong short-term fluctuations in output, employment, investment, wages and interest rates. The 2009/10 UK recession was one such downturn in the economy. This section builds on the model of economic growth developed in the previous section and seeks to understand what causes short-term fluctuations, and why employment, unemployment, wages and interest rates fluctuate along with GDP.

Lecture 8 - Markets, Prices, Supply and Demand I 

Lecture 9 - Markets, Prices Supply and Demand II

Lecture 10 - Consumption, Saving and Investment I

Lecture 11 - Consumption, Saving and Investment II

Lecture 12 - The Equilibrium Business Cycle Model

Lecture 13 - Expanding the Model with Labour Supply

Lecture 14 - Capital Utilization and the Business Cycle

Lecture 15 - Unemployment and the Business Cycle