Week 6 · Readings & resources

Week 6 — Readings & Resources

Principles of Macroeconomics Free sample edition

Your primary reading is Chapter 6 (in this module). Everything below is the optional, go-deeper layer — pick what helps, skip the rest.

How to use this page

This page has 10 items (4 readings and 6 videos). Allow 68–86 minutes for everything. Each group points back to the matching chapter section and class-session segment, so use the full menu when you want more practice, or take the quick path below.

Every video here has captions: turn them on with the CC button in the player. The chapter covers the same ideas in text.

Pick-one quick path (16–21 min total)

① Where is the economy in the cycle? The four phases

Chapter 6, Section “Trace the business cycle: four phases” · Session 1, Segment 1, “The business cycle and its four phases” · Remember: an expansion runs up to a peak, a recession runs down to a trough, and nobody can schedule the next turn.

Macro: Unit 1.1 -- The Business Cycle — You Will Love Economics — a classroom-style walk through the business-cycle graph that names expansion, peak, contraction, and trough and practices spotting each one in data on real GDP, unemployment, and prices. Skip the depression section if you are short on time. (video, 7 min) (captions: automatic)

② How far from normal? Potential output and the two gaps

Chapter 6, Section “Measure a recessionary gap: below potential, in units and percent” · Session 1, Segment 2, “Potential output and the two gaps” · Remember: a recessionary gap is potential minus actual output, an inflationary gap is actual minus potential, and you report each in dollars and as a percent of potential.

The Fed Explains Real Versus Potential GDP — Atlanta Fed — a short animated explainer from a regional Federal Reserve Bank on the difference between what the economy produces and what it could produce at normal, full use. Use it while working through the Week-6 module overview. (video, 4 min) (captions: creator)
Macro Minute -- Inflationary and Recessionary Gaps — You Will Love Economics — a two-minute sketch of both gaps on the aggregate-demand and aggregate-supply graph, with the crossing drawn to the left and then to the right of the long-run line. (video, 2 min) (captions: automatic)
Long-Run Aggregate Supply, Recession, and Inflation- Macro Topic 3.4 and 3.5 — Jacob Clifford — a quick, energetic lesson on drawing the vertical long-run line and then a recessionary and an inflationary gap beside it. This builds on Week 5's work with the aggregate-demand and aggregate-supply model. (video, 4 min) (captions: automatic)
How Big Is the Output Gap? — Federal Reserve Bank of San Francisco — a short research letter whose opening section defines the output gap and explains why a gap below potential pulls inflation down and a gap above it pushes inflation up; it also shows that potential output has to be estimated, so read the opening and skim the competing estimates. (reading, 8–12 min)

③ Why does a gap last? Expectations and self-correction

Chapter 6, Section “Explain why gaps last: expectations and SRAS” · Session 2, Segment 3, “Expectations and self-correction” · Remember: when wages and expected inflation adjust, short-run aggregate supply shifts, and output drifts back toward potential.

Long-Run Self-Adjustment- Macro Topic 3.7 — Jacob Clifford — shows the economy closing a gap on its own as wages and resource prices adjust, with short-run aggregate supply as the curve that shifts. Stop here before fiscal policy and the multiplier; next week takes that up. (video, 5 min) (captions: automatic)

④ Who calls a recession? The committee versus the rule of thumb

Chapter 6, Section “Date a recession: the committee versus the rule of thumb” · Session 2, Segment 4, “Dating recessions and the wait-or-act question” · Remember: a recession is a significant, widespread decline lasting more than a few months, judged across several indicators, not two negative quarters alone.

Business Cycle Dating Procedure: Frequently Asked Questions — National Bureau of Economic Research — the dating committee's own answers on what a recession is, which monthly indicators it watches, how it weighs depth, diffusion, and duration, and why it does not use the two-quarter rule. Read the questions on what a recession is and on the two-quarter definition first. (reading, 10–15 min)
All About the Business Cycle: Where Do Recessions Come From? — Federal Reserve Bank of St. Louis, Page One Economics — a plain-language essay on the four stages of the cycle, why two quarters of falling real GDP is only an informal rule of thumb, how the dating committee looks for depth, diffusion, and duration across several indicators, and what recessions cost workers who lose income and opportunities; read the section on the two-quarter question first, and treat its tables of past dates as background. (reading, 8–12 min)
Nobody Can Tell You When A Recession Starts — Finally Explained — an animated explainer on why a recession is dated only after the fact and why two negative quarters was never the official definition; its chapter on the definition myth is the part to watch first. (video, 10 min) (captions: automatic)

Optional one-stop reference (free online reference)

Business Cycles — Concise Encyclopedia of Economics, Econlib — an encyclopedia entry on booms and downturns; read the opening and the section on causes, which sets a sticky-price view beside a flexible-price view. The long historical record and its table of dates are optional. (reading, 10–15 min)

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