Download file to see previous pages...
Expansion and contraction are the fundamental phases of a business cycle. Under expansion, the real GDP surges and attains a peak. Once the peak is reached, setting out for contraction, the real GDP declines until it arrives at a trough where expansion starts all over again. Prices of commodities, including labor and production costs, rise at a faster rate during expansion. After reaching the expansion peak, labor cost is likely to decline, putting off some pressure on the rising prices. While the inflation rate is inclined to a cycle which casts a gloom on the business cycle, the inflation itself tends to remain as a constant (Knoop, 2004). A business cycle completes its course after its cycling above and below the trend level and the level of output goes back to the trend level.
A recession is primarily characterized by a significant decrease in consumer consumption and buying confidence. It also affects the confidence of investors to pour more money on investments. Since individuals are shrouded by pessimism concerning their future, recession crowds out business and the demand for investment declines (Knoop, 2004). During recession, output growth and employment level decline as well. Although, the level of prices does not slump readily, it will possibly drop under a prolonged recession. Further, the loss of the production sector becomes the cost of unemployment, leading to a greater economic gap between the rich and the poor and elevation of human misery. Although the United States has set a long period of economic upsurge early in year 2000, the intrinsic economic forces that direct business cycles were still at work (The Economist, 1999). These forces were probably shrouded by the unusual convergence of economic activities that time. In fact, the emergence of the recent financial crisis proved that the business cycle has never died.
In the cycle, times of less macroeconomic volatility often lead to
...Download file to see next pagesRead More
Economic indicators are useful only when the researcher has the idea to interpret. There has been strong correlation between economic growth and profits of organizations. Data on economic indicators Unemployment rate: The following provides the data on unemployment rate of United States.
Intermediate goods do not have their utility and demand for their own sake rather they are demanded for the production of final goods. For instance if raw cotton is used for producing yarn, raw cotton is the intermediate good then, but if yarn is used for producing cloth, then yarn becomes the intermediate good.
These fluctuations are usually measured by the real gross domestic product (GDP). One of the policy makers' main roles is to smooth out the business cycle and to reduce its fluctuations by narrowing the margin between the stages of growth and decline.
The term "cycle" can be rather misleading as business cycles don't tend to repeat regularly in time.
120, 1st Floor, GK Classics, Srinagar Colony, Hyderabad -500073, Andhra Pradesh, India and the second company being M/s. UNITED GROUP INFRASTRUCTURE PTY LTD, (UGI), a Private Limited Company, Incorporated laws of
Business cycle fluctuations are often explained against the model of Keynesian economy where the economy or an industry reaches short term equilibrium in a state of less than or above full employment status. (Sullivan and Sheffrin, 2003) When an economy or a industry
During the recession for instance, the rate of unemployment rises and the inflation rate declines (Stock and Watson 56). The period is characterized by low level of investments and decline in the GDP.
Considering the data of US in 2012, US can be said to be in the
From the 1970s, Hayeks theory of the government only participating in a limited way in the economy continues to gain popularity. The Hayeks ideas influence ensures support for the ideas while there is a continued feeling of impact today. However, it is critical to