Chapter VIII Business Cycle

Chapter VIII Business Cycle - Chapter VIII Business Cycle...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter VIII Business Cycle Business cycle is a decline in aggregate economic activity to a low point (contraction or recession), followed by recovery of activity (expansion) to a high point. It could be measure from peak to pear (high point) or from trough to trough (a low point). 8.1 What is a Business Cycle? Business cycle chronology is a detailed history of business cycle in the US and other countries. (Done by the NBER) Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprise. A cycle consist of expansion followed by contractions, recessions. This sequence of changes is recurrent but not periodic; in duration business cycles vary from more than one year to twelve. Five points in this definition 1. Aggregate economic activity . We look at broad economic variables such as real GDP, unemployment and some financial market variables. 2. Expansion and contraction . Contraction or recession is a period of falling aggregate economic activity. Depression is a severe contraction or recession. Trough is the low point of the business cycle. Expansion or boom is the period of increase aggregate economic activity. Peak is the high point of an expansion. Note : part of the output losses and gains that occur during a business cycle may become permanent. Turning points are all the peaks and troughs One goal of business cycle research is to determine the turning points. NBER determines when a through or peak has occurred. 3. Co-movement . Expansions and contractions occur at about the same time in many economic activities. 4. Recurrent but not periodic . It does not occur at regular predictable intervals and does not last for a fixed or predetermined length of time. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
5. Persistence . It is the tendency for a growth in aggregate economic activity to be followed by further growth and a decline by a further decline. 8.2
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/24/2011 for the course ECO 3202 taught by Professor Telier during the Spring '08 term at FIU.

Page1 / 5

Chapter VIII Business Cycle - Chapter VIII Business Cycle...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online