This document discusses how economic recessions can lead to increased drug use and related health issues. It notes that during recessions, unemployment rises and more people experience despair. When unemployment insurance expires, some turn to disability benefits or medications. When prescription opioid access is restricted, people may substitute other drugs. The document also briefly previews aggregate demand/aggregate supply economic models and concepts like how price level changes can impact consumption, investment, and net exports through wealth, interest rate, and exchange rate effects.

1. Drugs of Despair
Business Cycles and Economic Policy
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2. https://www.brookings.edu/wp-content/uploads/2017/08/casetextsp17bpea.pdf
https://www.brookings.edu/bpea-articles/mortality-and-morbidity-in-the-21st-century/

4. Drugs of Despair
Drug use from despair or addiction
Recessions Unemployment and Despair
Unemployment Insurance runs out Disability /
medications, etc.
Attempt to crack down on pill mills raised price
of prescription opioids substitutes
Markets will meet demand…
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6. 9
Classical Economics
Until Now:
Been thinking long run - “Eventually”
Prices adjust and markets clear
Increases in money inflation
Short run (couple years):
Can have recessions
Changes in money can have an influence on
output
We need another (new) model!

7. AD/AS Preview
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8. Fidget Spinners
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9. Super Bowl Tickets
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10. Aggregate Demand
AD curve: the quantity of “ALL” g&s demanded
at any given price level.
AD = C + I + G + NX
Assume G fixed by govt policy.
Slope of AD
must determine how a change in P affects C, I,
and NX.
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11. Aggregate Demand
Aggregate Demand = C + I + G + NX
Suppose the price level increases:
Wealth Effect
Real value of money falls
Consumers are poorer, purchase less (C)
Interest Rate Effect
Requires more “dollars”
Less saved interest rate increases
Less investment (I)
Exchange Rate Effect
Increase in price level, less sold abroad (NX)
Downward sloping

12. Wealth and I-Rate Effects
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13. Shifters of AD
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