Economic Fluctuations

Economic Fluctuations - Economic Fluctuations BA206...

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Economic Fluctuations BA206 Macroeconomics Robert McGill 18 Oct 2011 Economic Fluctuations 1
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Historically, the U.S. economy has experienced alternating periods of expansion and contraction. Economic fluctuations are defined as the rise and fall of economic activity relative to the long-term growth of the economy. Economic fluctuations vary in length and intensity, but all fluctuations share common features. The growth and recession of the economy involve the entire nation and can affect many other economies around the world. In order to understand business cycles we need to examine the components of the business cycle. According to the National Bureau of Economic Research, any economy has two phases: expansions and contractions. During an expansion, the economy’s output increases, and during a contraction, the economy’s output decreases. Contractions can vary in intensity. In fact, the contraction can be so severe that it can be considered a depression. A depression is a sharp reduction in a nation’s total production lasting
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Economic Fluctuations - Economic Fluctuations BA206...

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