Business Cycles

Chapter 10 (Business Cycles) Business Cycles ( profession Flucuations) The ups and drinks in economy wide stinting activities are called business vibrations or busyiness fluctuations. When business fluctuations are dictatorial they are called expansion, the opposite of expansion is contraction which is slow down in the pace of national economic activities. Phases of the business cycle over a several year period 1.A florescence is when business activity reaches a temporary maximum with liberal usage and near capacity output. 2.A recession is a decline in total output; income, employment, and trade persistent six months or more. 3.The trough is the bottom of the recession period. 4. convalescence is when output and employment are expanding toward across-the-board employment. Causes of business fluctuations A. versed (endogenous) theories 1.Innovation theory 2.Psychological theory 3.Monetary theory B.External (exogenous) Theories 1.War theory a.Examples are WW2, the Korean war, and the Vietnam War 2.External shock a.1973 oil embargo b.Price Shock c. pack Shock Recent recessions 1973-1975 1982-1982 1991-1992 3/2001-11/2001 Non-cyclical fluctuations 1.Seasonal fluctuations that are not link up to the business cycle. 2.

Long term growth trend is corroborative and cyclical fluctuations occur around this trend. Unemployment Types of unemployment 1.Frictional unemployment consists of those searching for jobs or waiting to take jobs soon. 2.Structural unemployment is due to changes in the organize of demand for labor, ex. When certain skills become obsolete or geographical distribution of jobs changes. 3.Cyclical unemployment is caused by the recession phase of the business cycle, which is sometimes called deficient demand unemployment. Definition of full employment The full employment does not mean zero unemployment. Full employment (natural rate of unemployment) = frictional unemployment + structural unemployment. The natural rate of unemployment is... If you compliments to get a full essay, order it on our website: Orderessay

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