Chapter 14 - Consequences of Business Fluctuations Chapter...

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Consequences of Business Fluctuations Chapter 14
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Discussion Topics Fluctuations in business activity Consequences of business fluctuations Macroeconomic policy options
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Nature of Business Fluctuations Expansionary phase Peak of business cycle Recessionary phase Trough of business cycle Page 338
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Page 338 Four Phases of a Business Cycle Length of cycles varies over time…
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Indicators of Economic Activity Coincident indicators : current production, current disposable income, current sales Lagging indicators : business inventories, duration of employment, average interest rate Leading indicators : new orders for goods, new building permits, new investment in plant and equipment, changes in the money supply Forecasting models : mathematical methods of forecasting future trends in the economy Pages 339-340
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Page 340 Indicator index Actual activity several months later… A classical example of a leading indicator
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Two Consequences of Business Fluctuations Fluctuations in the civilian unemployment rate and implications for policy Fluctuations in the rate of inflation and implications for policy Pages 354-364
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Unemployment Rate
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Calculation of Civilian Unemployment Rate Annual rate Number of civilians unemployed Size of total civilian labor force = where the size of the total civilian labor force is
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Chapter 14 - Consequences of Business Fluctuations Chapter...

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