1.3 Embracing The Dysfunction

📚 Module 3 Summary

Module 3 is where the tidy textbook version of economics gets ripped open and the mess spills out. We move past the idealized flow charts and dive into the real dysfunctions: GDP contractions, recessions, depressions, inflation that eats your paycheck, and unemployment in all its miserable flavors. This is the crash course in how the economy actually breaks down — and why businesses, workers, and governments scramble to respond when it does.


🔑 Key Concepts

  • Economic Growth & Contraction: Why GDP trends matter more than raw numbers
  • Recession vs. Depression: How long the economy has to sulk before it’s officially in crisis
  • Inflation: Prices rise, purchasing power falls, and your quality of life takes a hit
  • Causes of Inflation:
    • Demand-Pull (too much demand, too little supply)
    • Cost-Push (rising production costs passed on to consumers)
    • Built-In (wage–price spiral driven by expectations)
  • CPI & PPI: Consumer and Producer Price Indexes as inflation trackers
  • Employment Metrics: Why “full employment” doesn’t mean zero unemployment
  • Types of Unemployment:
    • Frictional — in between jobs
    • Structural — jobs lost to shifts in industries or tech
    • Cyclical — jobs lost in downturns
    • Seasonal — jobs tied to time of year
    • Underemployment — jobs beneath skill level or insufficient hours
  • Reality Check: Economic dysfunction isn’t a bug — it’s the feature


🧠 Knowledge Check

Congratulations, you’ve made it through the part where the economy shows its cracks — recessions, depressions, inflation, and unemployment in all their tragic flavors. Now it’s time to prove you were paying attention instead of doomscrolling. These questions aren’t here to ruin your day — that’s inflation’s job — but they will help you figure out if you can spot when the economy is booming, busting, or just plain gaslighting you. Take the quiz, laugh at your mistakes, and remember: economists get paid for guessing — you’re just doing it for free.


📘 OpenStax Chapter Reference

We get it. You don't believe that this stuff is real. Who would? But if you don't believe us, you can check out the Introduction to Business textbook by OpenStax, where we stole, er... borrowed from.

  • Chapter 1: Understanding Economic Systems and Business
    • Section 1.4: Macroeconomics : The Big Picture
    • Section 1.6: Microeconomics : Zeroing in on Businesses and Consumers


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