Business Cycle

msk2222's version from 2018-01-26 02:21

Section 1

Question Answer
Business cycle characteristics1. rely on business enterprises, 2. cycle has an expected expansion nd contraction period 3. phases occur same time throughout economy 4. periodic but not recurrent 5. lasts 1-12 yrs
Phases of BCtrouhg, expansion, peak, contraction
What happems- expansionaggregate economy is expanding
What happems-contraction/recession/depressionaggregate economy is declining
What to do- early expansionfully use existing workforce
economy returns to normaleconomic policies adopted by central bank phased out
recessionhigh values on safer assets like utilities and staple goods
expansion established-boomtesting limts-increase cant find qualified people-rising wages-reduced profits/anticipating future expansion

Section 2

Question Answer
Economic Activity-EEGross domestic product (GDP), industrial production, and other measures of economic activity stabilize and then begin to increase.
Economic Activity-late expansionActivity measures show an accelerating rate of growth.
Economic Activity-peakActivity measures show decelerating rate of grow
Economic Activity-recessionActivity measures show outright declines.
Employment-early expansionLayoffs slow but new hiring does not yet occur and the unemployment rate remains high. Business turns to overtime and temporary employees to meet rising product demands.
Employment-late expansionBusiness begins full time rehiring as overtime hours rise. The unemployment rate falls.
Employment-peakBusiness slows its rate of hiring. The unemployment rate continues to fall but at a decreasing rate.
Employment-recessionBusiness first cuts hours and freezes hiring, followed by outright layoffs. The unemployment rate rises.
Consumer and Business Spending-EEUpturn-spending-housing, durable consumer items, and orders for light producer equipment.
Consumer and Business Spending-LEUpturn in spending becomes more broad-based. Business begins to order heavy equipment and engage in construction.
Consumer and Business Spending-PCapital spending expands rapidly, but the growth rate of spending starts to slow down.
Consumer and Business Spending-RDecreased spending most evident in industrial production, housing, consumer durable items, and orders for new business equipment.
Inflation-EEInflation remains moderate and may continue to fall.
Inflation-LEInflation picks up modestly.
Inflation-PInflation further accelerates.
Inflation-RInflation decelerates but with a lag.

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