The Growth And Peak Stage Of A Business Cycle

The Growth And Peak Stage Of A Business Cycle
Business cycles contain several stages which span GDP and time itself. These stages are growth, peak, recession and a trough or depression. These
cycles repeat themselves over and over through out time in the business world. The growth and peak stage of a business cycle are when
companies are building and providing great products and services. This is also the period when jobs are most abundant and harder to fill because
job positions are in demand. After the peak stage a risky point in time follows which is the recession stage. During this time people tend to loose
their jobs and it is a much harder time to find a job as well. The depression stage is depressing to both companies and people because many consumers
lose their jobs and can...show more content...
We entered a depression period and this period lasted longer then some of the other periods in our history. Many economists wonder why a
recovery, which leads out of the depression and into the growth stage, took longer then normal to begin. When looking back at history, I may have
found the answer. Big spending is required to make companies produce more and the biggest factor of spending money is war. This paper will
examine a close relation in our history of recession, war, and recovery. Since 1950, there have been many recessions in the US, which greatly affected
all Americans. At the same time there have been innovations, technology, banking changes and political activities which have been thought to have
caused the recessions, and ultimately fixed the recessions. We will explore a potential relationship between recovery and war as to the potential for
speeding up a recovery. Not too long ago, during the Great Recession of 2007–2009, employment had peaked in the first part of 2008 and then it
declined. According to McConnell (2015), "In the first part of 2010 job growth was very slow to recover and economists have been vigorously
debating why employment recovered so slowly after the Great Recession of 2007–2009. The Great Recession began December 2007 and ended in June
2009" (p.18). Banks had loaned excessive amounts of money to consumers
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Business Cycle Essay
In everyday society, companies are affected by the economy. The company either suffers or benefits depending on what kind of economy it is. This
will depend on what kind of company it is, and what kind of market the business does well in. The Business Cycle is what determines this factor. It is a
term used in economics to designate changes in the economy.
Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases–prosperity, liquidation, depression, and
recovery. During a period of prosperity, a rise in production leads to increases in employment, wages, and profits. Obstacles then begin to obstruct
further expansion. Production costs can increase, helping create a rise in prices, and...show more content...
Peapod, is an Internet grocer that provides online grocery shopping to various cities across the country. In an economy where unemployment is rapidly
decreasing , anything that can allow people to get things done easily and swiftly are greatly appreciated. Since Americans work more hours than any
other country in this world, Peapod can only benefit from everybody's inability to not stop working. Nobody has enough time to do the little things,
like get gas, go grocery shopping, etc.... Society is also willing to pay the extra bucks to have the groceries hand delivered to their doors because
grocery shopping is a hassle and its annoying. No one likes doing it but it is something you have to do, might as well have someone else do it for you.
Peapod is a sure thing for the next millennium.
FannieMae is a company that makes capital by lending money to people who need mortgages and by borrowing money at low interest rates.
FannieMae is able to make money in any kind of economy. During times of low interest rates they make money on people who bought fixed rate
mortgages at a time of high interest rates. They also have a hard making money during this time because their marginal percentage is smaller and
they make less of a profit. During times of high interest rates, they lose money on people who bought fixed rate mortgages at low interest rates. They
also make a lot of assets during this time because they borrow from the federal reserve or banks at lower interest rates and lend

Canada's Business Cycle
Have you ever wondered how in today's society the prices for products and services are increasing each day and the average house costs around a
million and a half? People are now expecting the economy to go into a depression. This is what is called the business cycle, a cycle or series of
cycles of economic expansion and contraction. The business cycle was first demonstrated the early 1900s in Canada in which it made the time period
of a time of prosperity and progress for almost all Canadians. Throughout the different decades between 1900 and 1930s, Canada has progressed
positively in terms of political, economic and social change. For these changes, it is safe to assume Canada "grew up" in the early 1900s.
Canada in the early 1900s was struggling...show more content...
This marked the popular invention of two–way voice transmission radio when Reginald Fessenden, a Canadian–born inventor, made the first wireless
radio broadcast on December 23 near Washington D.C. in the United States; Marconi, who lost out on making the first radio broadcast, succeeded in
receiving the first transatlantic radio message at St. John's, Newfoundland. This event paved the way towards the invention of the radio and the modern
cell phones. The next decade rolled in and along came progress and prosperity, it started when the popularity of the automobile was increasing,
horse–drawn carriages were falling out of trend and automobiles replaced it as the primary

Business Cycle
ASSIGNMENT 1
Introduction
In macroeconomics, business cycle played an important role to show what a national economy is going; therefore, this essay will define what
business cycle is and its characteristics. Besides, all of variables such as Real Gross Domestic Product (RGDP), inflation and unemployment rate and
their behaviour in the business cycle will be also demonstrated in the second part. The final part of this essay will analyse and compare the situation
of Australian economy and USA economy in period of 10 years since 1998 based on the concept of "the business cycle". In addition, this is the writer's
opinion about the business cycle relied on these above data about exhibit Australian and USA economy performance.
WHAT IS...show more content...
3. Unemployment:
_The economic problem happened when people who have abilities to work but they cannot find the job
_It caused by:
+The nature of changes in the structure of the economy (structural unemployment includes seasonal unemployment)
+ People leave a job to find a new one (frictional unemployment)
+The level of demand in the economy is not sufficient to sustain full employment (cyclical unemployment) (Hansen, 2008).
Australian Economy VS USA Economy
Differently, a fiscal or financial year of each country is not the same. Normally, the financial year in Australia starts at 1 July of precious year and

Planning Cycle : Business Planning
Part 2 Planning Cycle: Business planning is a statement of business goals, how they can be attained and plans for reaching them. When the existing
business is to be taken to India a minimum 3– 5 years of business plan is required, because the investors has to look for their annual return in that
timeframe. It is rightly said that – "Failing to plan is, planning to fail." There are five steps involved in planning cycle. 1.Defining the mission
statement. 2.Defining the current status of the business. 3.Determining corporate strategy. 4.Identifying international opportunities. 5.Revising the
business plan. 1.Defining the mission statement The mission behind launching Tim Hortons in India is – "to deliver superior quality products and
services for the guests and communities through leadership, innovations and partnerships." TIM HORTONS Each business has a mission statement
before it come into existence or reopens in the target market. Likewise, in India there are several coffee shops and they all have one or the other
mission statement. CAFГ‰ COFFEE DAY Mission Statement– To be the best cafГ© chain by offering a world class coffee experience at affordable
prices. COSTA COFFEE Mission Statement– Our mission has always been to save the world from mediocre coffee. 2.Defining the current status of
the business At current, Tim Hortons is the leading coffee brand in Canada. Out of 10 coffee cups sold in Canada 8 are of Tim Hortons'. This is all
because it has

Economic Growth– GDP
Economic Growth...
...An increase in an economy's ability to produce goods and services
Gross Domestic Product– represents the value of a country's national income in one year.
An increase in real GDP means that the standard of living within a country is increasing. It is therefore used as a way of measuring a country's
economic growth.
The Business Cycle– there are discernable patterns in these levels over time, there will be periods of time when economic activity is rising and other
times when the level of economic activity slows down.
The Business Cycle
The Four Stages of the Business Cycle are:
Boom: A period of very fast economic growth, with rising incomes and profits.Inflation will rise and there will be...show more content...
This is because investors will look to buy UK assets since they now command a higher return. As the demand for sterling rises it pushed up the
exchange rate.
When the exchange rate alters it affects the degree to which firms are competitive in foreign markets, and also affects the cost of imports of raw
materials, components and semi–finished products as well as foodstuffs. If the pound rises in value compared to the euro or the dollar, for example, it
means that exporters will find that they are less competitive since foreign buyers now have to give up more euro or dollars to buy the same amount
of pounds. To those foreign buyers it seems like the goods and services have risen in price and this can affect demand for the UK exports.
At the same time, UK buyers of foreign goods will get more dollars or euro for their pound and it will feel to them like imports prices have fallen.
The reverse applies if the exchange rate falls in value and the pound is worth less against other currencies.
Strong
Pound
Imports
Cheaper
Exports
Dearer

Weak
Pound
Imports
Dearer
Exports
Cheaper
Inflation...
...A rise in the general price level over a period of time.
Inflation is seen as being a central economic factor. Changes in the rate of inflation have significant effects on businesses and individuals. Inflation is
important for the following

Effects of Business Cycles
Introduction In general the economy tends to experience different trends. These trends can be grouped as the business/trade cycle and may contain a
boom, recession, depression and recovery. A business/trade cycle (see figure 1) is the periodic but irregular up–and–down movements in economic
activity, measured by fluctuations in real Gross Domestic Product (GDP) and other macroeconomic variables. Samuelson and Nordhaus (1998), defined
it as 'a swing in total national input, income and employment, usually lasting for a period of 2 to 10 years, marked by widespread expansion or
contraction in most sectors of the economy'. These fluctuations in economic activity usually have implications on employment, consumption, business
confidence,...show more content...
USA budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years is of much concern. The September 11 terrorism attacks has
aided to the retrenchment of economic activity and this has also affected the level of confidence in businesses and consumers. In 2000, consumer
debt growth of 8.6% compared with real disposable income growth of 4.8%. During the first quarter of 2006, private household debt grew to 11.6%
annually compared with zero real disposable income growth. The thriving technology in the USA led to a large number of investment in information
processing equipment and software resulting in high equity values which also resulted in a decline by the second quarter of 2000. In October
2001employment fell by 439,000 jobs, and unemployment rate soared from 4.9% to 5.4%. Over 500,000 jobs were lost in the recession and a further
one million jobs were destroyed in the weak "job–loss" recovery from November 2001 to June 2003. People who lived below the poverty line jumped
from 31.06 million to 34.06 million by 2002. This recession could have been avoided, however the argument against government intervention using
discretionary fiscal policy to tackle recession accentuates the long time lags involved in altering fiscal policy in USA. There was proof in 2000 that
the USA economy was slowing. Congress passed a tax cut in 2001, but it took Congress until March 2002 to pass the Economy Recovery Act to
provide further inducement to the

Stages of a Business Cycle
STAGES OF A BUSINESS CYCLE
RECESSION A recession–also sometimes referred to as a trough–is a period of reduced economic activity in which levels of buying, selling,
production, and employment typically diminish. This is the most unwelcome stage of the business cycle for business owners and consumers alike. A
particularly severe recession is known as a depression.
RECOVERY Also known as an upturn, the recovery stage of thebusiness cycle is the point at which the economy "troughs" out and starts working its
way up to better financial footing.
GROWTH Economic growth is in essence a period of sustained expansion. Hallmarks of this part of the business cycle include increased consumer
confidence, which translates into higher levels of...show more content...
MOMENTUM Many economists cite a certain "follow–the–leader" mentality in consumer spending. In situations where consumer confidence is high
and people adopt more free–spending habits, other customers are deemed to be more likely to increase their spending as well. Conversely, downturns
in spending tend to be imitated as well.
TECHNOLOGICAL INNOVATIONS Technological innovations can have an acute impact on business cycles. Indeed, technological breakthroughs in
communication, transportation, manufacturing, and other operational areas can have a ripple effect throughout an industry or an economy.
Technological innovations may relate to production and use of a new product or production of an existing product using a new process. The video
imaging and personal computer industries, for instance, have undergone immense technological innovations in recent years, and the latter industry in
particular has had a pronounced impact on the business operations of countless organizations. However, technological innovations–and consequent
increases in investment–take place at irregular intervals. Fluctuating investments, due to variations in the pace of technological innovations, lead to
business fluctuations in the economy.
There are many reasons why the pace of technological innovations varies. Major innovations do not occur every day. Nor do they take place at a
constant rate. Chance factors greatly influence the

Effect Of The Business Cycle Essay
This study uses time–series data from the CPS March data to investigate the effect of the business cycle from 2003 to 2014 on the wage differentials
between females and males. The CPS is a monthly sample survey of approximately 60,000 households conducted by the Census Bureau for the
Bureau of Labor Statistics, which can be considered as the primary source of labor force statistics for the population of the United States. This study
also uses data from the Local Area Unemployment Statistics (LAUS) to get the state unemployment rate from 2003 to 2014. LAUS is a Federal–State
cooperative effort that publishes monthly estimates of employment and unemployment for approximately 7,300 areas, including all states, countries,
metropolitan areas, and cities with a population of 25,000 or more, by residence. Labor force data from the LAUS program follows the same CPS
concepts and definitions used for the national labor force data. In particular, this study uses the seasonal adjustment monthly state unemployment rate,
which eliminates the influences of weather, holidays, the opening and closing of schools, and other recurring seasonal events from economic time
series. Since the CPS collects data through interviewing a limited amount of people, it cannot fully represent the labor market of the United States
because of the sample selection bias. Also, since the CPS data is gathered by interviews, the status of survey respondents is only determined by how
they respond to the survey.

The Four Stages Of The Business Cycle
The four stages of the business cycle are complex phases that our economy undergoes. To grasp the concept of the stages, you must first be
familiarized with the business cycle itself. The business cycle is the alternating periods of growth and decline. Or to be more intricate, "The business
cycle is the periodic but irregular up–and–down movement in economic activity, measured by fluctuations in real gross domestic product (GDP) and
other macroeconomic variables," (Inc.com). Abusiness cycle is comprised of four stages: recovery, peak, recession, and trough.
In the recovery, the economy is growing. It is commonly indicated by a bull market. The recovery is the increase in the rate of economic activity
established by a moderate to low unemployment percentage, towering development, and swelling prices. The next phase of the business cycle is the
peak. The peak is the most desired stage for it is the superior point of the cycle. During this stage, the increased consumer confidence translates into
higher levels of business activity. The peak is, "When the economy is overheated, and is in a state of irrational exuberance," (Inc.com) In other
words, the peak is the point at which the economy is as robust as it can get. Following the peak in the business cycle is the recession. The recession is
when the economy is on the decline and jobs are being lost, unemployment rates soars, and production is slowing. It identifies the end of a growth
interval in the business cycle. Often,

Ipo : A Business Cycle Essay
Introduction
A company goes to a different business cycles. After surviving the startup period and start making positive profits, a company may choose of make an
IPO. The term initial public offering (IPO) is used by company to raise capital by selling stock in primary market. Investopedia defines an initial public
offering (IPO) as the first time a company sells its stock to the public. This is a way to raise money by issuing debt and it is only called IPO if the
company have never issued equity to the public before. IPO is usually referred "going public" because company by selling portion of the company to
the public become a public company. Once the stock of a company is sold to the public, the shareholders become the owner of the company since they
bought the company's stock. Per Investopedia, companies decide to go public for these following reason:
To raise capital
Public companies have increased scrutiny which may provide them better rates if they decide to issue debt as well
A publicly traded company may issue more money if there is market demand, and this may make mergers and acquisitions process easier
Trading in the stock exchange provides the company more liquidity which can allow them to provide employee benefits such as stock ownership plans,
thus attracting more talents.
Keywords: IPO
The Process of Getting an IPO (Investment Banking)
There are a lot of components of IPO. There are a lot of considerations and requirements that should be met before a

Powerpoint Business Cycle
The PowerPoint is going to talk about the basic economic cycle and how it relates to the market
The business cycle will also be discussed and the impact it has on employment, the market, the inflation as well as demand and supply.
The stock market cycle and its relationship to the economic or business cycle will be discussed.
The business cycle is a cycle the economy goes through every 7 to 10 years.
It is very unpredictable due to constant change in the market. Each stage of the cycle differs on length of time based on market and outside factors.
The business cycle is comprised of 2 main phases: the expansion phase– occurs when the economy is growing; and the recession phase– occurs when
the economy is dwindling.
Each phase has defined emotions that affects the...show more content...
Most often moderate inflation occurs, but must be controlled by the government in order to maintain stability.
The cycle will continue until there is a destabilization in the market, causing recession to occur.
The expansion phase can be divided into 3 phases: the recovery phase, the early phase and the late phase.
The expansion phase can be split into 3 phases:
Recovery Phase
Most people in this phase are still cautious of the market due to the recent recession or depression.
The stock markets slowly rises as commodities rise. Also the inflation rate falls in order to reflect the situation of the market.
Early Phase
People are becoming more confident in the market and are willing to invest more.
The economy is more stable, causing the stocks to continually become strong.
Late Phase
There is an excessive confidence in the market, causing people in unnecessarily spend.
Inflation rates start to rise as price, demand and supply increases.
The market suddenly begin to fall, causing the economy to being the recession/depression

Macro Economics
Business Cycles
Business Cycles
в–є The value of real GDP over time shows periodic
fluctuations in its movement
в–є The business cycle refers to the periodic fluctuations
of economic activity about its long term growth trend
в–є The Business cycle is the more or less regular pattern
of expansion (recovery) and contraction (recession) in economic activity around the path of trend growth.
п‚§ At cyclical peak, economic activity is high relative to trend п‚§ At a cyclical trough, the low point in economic activity is reached.
The business cycle
Potential output
Real GDP
3
3
2
2
4

41
1
O fig Time
Trend output
4
Actual output
4
Business Cycles
в–є The trend path of output is the smooth path of...show more content...
ers
Interest Rate Spread
Delivery Times
Stock Prices
New Building Permits
Average Work Week
Unemployment Claims
Indicators of Business Cycle
Co–incident Indicators
Payroll employment
Personal income
Manufacturing and trade sales

Industrial production
Indicators of Business Cycle
Lagging Indicators
Unemployment
duration
Inventories to sales ratio
Inflation rate for services
Outstanding commercial loans
Consumer credit to personal income ratio
Prime interest rate
Need for Macroeconomic Stability
в–є
Large fluctuations in output, employment and inflation add to uncertainty for businesses and consumers, and can reduce the economy 's long–term
growth potential
в–є
Stability allows businesses, individuals and the government to plan more effectively for the long term, improving the quality and quantity of
investment in physical and human capital and helping to raise productivity Stabilization Policies
пѓ
Stabilization Policies: Actions taken to impact aggregate demand to moderate the expansion and contraction phases of the business cycles
пѓ
Stabilization policies are fiscal and monetary policies used to combat the cyclical movements
Purpose:

пѓ
During an economic expansion moderate the growth rate of aggregate spending (equitable distribution)
пѓ
During an economic contraction (recession) increase the aggregate spending
Stabilization Policies
пѓ
Monetary Policy:
Aims to

Mexico Business Cycle
Mexico's Business Cycle
The term business cycle or economic cycle refers to the fluctuations of economic activity around its long–term growth trend. It involves shifts over time
between periods of relatively rapid growth of output–recovery and prosperity, and periods of relative stagnation or decline– contraction or recession.
These fluctuations are often measured using real gdp.
Despite being termed cycles, these fluctuations in economic growth and decline do not follow a purely mechanical or predictable periodic pattern. In
recent years economic theory has moved towards the study of economic fluctuation rather than a 'business cycle '. Some economists believe calling the
business cycle a "cycle" to be a misnomer, because of...show more content...
Since the nature of the financing flows to Mexico were short–run, the vulnerability of the economy increased due to these adverse shocks, resulting in
capital outflows and a collapse of the exchange rate and output. 1995–99 saw a recovery of the economy after the implementation of an IMF supported
adjustment program including support schemes for the banking industry, a floating exchange rate, the tightening of monetary policy, fiscal consolidation
and restrained income policies. This resulted in an improvement of the economic situation and real gdp grew at about 5% per year.
Examining of the occurrences in these periods can assist in identifying possible sources of Mexican business cycles. They include– Pol*i*tical cycles–
Short term rule by autocratic governments, without reelection possibility, neglect long run benefits of public goods and confiscate assets that generate
long term flows of resources The mayke distorted policy decisions and reduce bothe quality and quantity of public goods. Investors and consumers
delay private decisions and economic activity declines as uncertainity in the economy increases proportionally to the end of the presidential term. In the
context of autocratic govts, financial crisis is endogenous to the political cycle.
Exchange rate

Business Cycle And Recovery Period Analysis
Introduction The period following a recession, where the GDP of the economy is increasing, is encapsulated in the term 'recovery'. Subsequently, an
increase in national output would ensue, thus prompting the recovery and growth of the economy. As opposed to the previously existent contractionary
period, the economy would now be working at higher capacity allowing factors such as the rate of unemployment to decline, in addition to increasing
productivity. Illustrated in the diagram below shows the business cycle and recovery period. As shown in the diagram, the recovery stage occurs
between the trough (the lowest point in the graph, and where the real output is equal to the potential output. Impact on values of imports The term
...show more content...
Nevertheless, despite a decline in quantity demand for these good and services, the resultant increase in price may balance the decline that
occurred to the demand. Thus, as a result of the elasticity of price of imported goods, the increase of price affecting imports, caused by
deprecation of currency, may ultimately have negligible effect on the value of imports, and might possibly even cause it to increase. Additionally,
despite the depreciation of the British pound in 2007, the UK's economy experienced a 3.1% increase in imports. This is a result of the UK
economy being at a stage of recovery, which would cause to increase imports, as the manufacturing division would import an increased amount of
foreign products. Thus, it is plausible that a fall in the value of the GBP, which would inevitably cause an increase in price of imports, may prompt
the value of imported goods and services to remain stagnant or decrease. Due to decreased labour productivity In the instance of a decline in the
labour productivity of the UK in its entirety, a decline will consequently occur in the general production of goods in the country. This would trigger a
chain of events that would concomitantly increase the cost of production per unit for the producers, causing the supply to decrease, regardless of the
price it is sold at. These circumstances would result in a reduction of the aggregate supply (AS) of the

The And Third Steps Of The Business Cycle Essay
iUser Accessories
Jack and Sarah are between the second and third steps of the business cycle, they have developed a business idea and are preparing to move their idea
into a firm. The name they chose for their new firm is iUser Accessories this is a tentative name that takes advantage of the Internet Domain name, a
non–traditional barrier to entry. The have decided not to Advertise until a trademark attorney is consulted. This ethical decision will save them from
being sued in the future from theft of intellectual property. Other non–traditional barriers they utilize are first mover advantage and new approach to an
industry. The business they are intend to try will place 10 kiosks in malls and other high traffic areas that sell accessories for the iPhones, iPads, and
iPods. In addition, they have created a series of short videos that help users make better use of their devices. These videos will be available through
their web site or an app they are developing, these online options will charge a one–time fee for access. They are going to use these online resources as
a part of their marketing strategy by offering promotions here.
The business plan was developed in a business class, then refined, and submitted for a business plan competition. That same business plan won the
competition giving them 10,000$ to work with. Winning this completion shows the business plan is complete and that Sarah and Jack have enough
passion stick with their plan after the class ended and

Explain The Four Phases Of Business Cycle
Understanding business cycles is the essence of a course in macroeconomics. The term business cycle is an economy cycle also known as trade cycle
which refers to aggregate production. It refers the periodic but irregular upward and downward activity over several months or years in the market
economy. In another word we can say that 'Abusiness cycle occurs due to the fluctuations that an economy experiences over time resulting from
changes in economic growth.' A business cycle is typically characterized by four phases–Expansion or prosperity, recession, depression and
recovery–that repeat themselves over time.
Here I am showing the diagram of four phases of business cycle – The business cycle starts from the lower point and passes through...show more
content...
Here we should not be confused by the terms 'invention and innovation'. Invention is like discoveries of something new but the term innovation is the
application form states inventions to actual production. However, in way of economic term innovation means the commercial application of inventions
such as new techniques of production, new methods of organization etc. Advocates of a free market might be attracted by this theory because it
emphasizes enormous innovative power in

Business Cycle Case Study
1. In your own words, explain what the "Business Cycle" is. Business cycle is Gross Domestic Product (GDP) measure. The cycle is an increase and
decrease of monetary value throughout the entire cycle.
a. Why it is important for a company to try and forecast the Business Cycle? It is important for a company to try and forecast the Business Cycle to
indicate practices beneficial and not beneficial to the organization with the goal of an upward trend line and minimal increase and decrease to GDP for
steady growth in the Business Cycle.
b. In general, are short–term forecasts more or less accurate than long–term forecasts? Explain. Short–Term forecasts overall is less accurate than
long–term forecasts. Data collected over a sufficient period create a clearer analysis of three of four...show more content...
Market experiments are based on smaller scales.
2.Market experiments are based on short–term controlled conditions.
3.Market experiments price changes can result in loss of customers ( D.N. Dwivedi).
c. If you were to design a statistical sample in order to estimate a demand curve, would you conduct a random sample of the general population, a
targeted sample, or a randomized–targeted sample? Explain. If I were to design a statistical sample, I would design a random sample in order to
estimate a demand curve. A random sample is choosing any of the population for survey, which might tell me what a random person expects to see in a
product. Other scenarios might dictate the better approach, an example is if you wanted to find out what would be the most popular beard dye than
you might consider using a target sample to target the male population.
d. Assume your staff presents you with 2 different regressions of a demand curve for your most important product. One of the regressions has an
R–squared of 0.86 and the other has an R–squared of 0.61. Assume that both regressions have a t–value for the coefficient of 1.8. Which would you
choose to work with and

Business Cycle Theories : A General Comparison
Business Cycle Theories: A General Comparison
Maria Sciarrino
Niagara University
ECO101HON
Business Cycle Theories: A General Comparison
Throughout history, economies have experienced times of high growth and low unemployment as well as times of little or negative growth and high
unemployment. It is controversial whether or not these instances occurred from regular fluctuations in the market. These alternating up and down
fluctuations typically occur over several years, with each individual cycle varying in length and intensity. These fluctuations are known as business
cycles, which have four phases. When the cycle is at its peak, the economy is nearly at full employment and the economy is producing at or nearly at
full...show more content...
The differences and similarities of these four theories is the main focus of this paper.
Real Business Cycle Theory (RBC) defines the business cycle as being driven by unexpected technology shocks which include any event that alters
land, labor, capital, or technology. Positive real shocks, such as good weather, are said to cause an economic boom. Good weather has a positive effect
on land which increases the production of agricultural goods. Negative shocks tend to cause a recession. For instance, a plague can wipe out a large
portion of a population which decreases labor and, consequently, productivity falls. It is believed that disturbances from technological shocks will solve
themselves quickly and return to equilibrium without government intervention.
While Real Business Cycle Theory is considered a "supply–side" theory, each type of shock can also influence demand. "Shifts in technology influence
both the supply of goods for a given level of inputs (work effort in particular), and the demand for goods through its effect on wealth and the labor
/leisure decision" (Plosser, 1989, p. 57). This suggests that the initial shock, which increases or decreases productivity, will influence work effort and
carry out to other sectors of the economy. RBC models are characterized by agents (firms or households) who make decisions using rational
expectations with the intent of

The Growth And Peak Stage Of A Business Cycle

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The Growth And Peak Stage Of A Business Cycle