The Current State of the Economy and Unemployment. 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.