Macro Essay

995 Words4 Pages
Define a business cycle Provided by economists.about a business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. Identify (3) key economic variables that are used to characterize a business cycle. Contraction- is a slowdown in the pace of economic activity. Expansion- is a speedup in the pace of economic activity. Peak- is the upper turning of a business cycle. Based upon the 3 key economic variables, what are the characteristics of a recession? A recession is a broad contraction of the economy. Moffat declares there is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough as stated by Moffat. Between trough and peak, the economy is in an expansion. According to the NBER, when did the recessions of (1981-1982) and (2007-2009) begin and end? Recession (1): July 1981 - November 1982 Recession (2): December 2007 – June 2009 Compare and contrast the recession of 1981-1982 with the recession of 2007-2009 with a detailed examination of real GDP, Unemployment, and Inflation. During the recession beginning in 1981, GDP fell by 2.9%. At the end of the recession in 1982 the GDP fell by 2.7%. According to Marc Labonte, CRS servicer, the fall in GDP during the 2007 recession was relatively mild. It was mild because GDP grew during the first and second quarters of 2008. But the decline in GDP accelerated in the fourth quarter of 2008. By the end of the recession in 2009 the GDP was in decline by 4.1%. The 1981 recession saw in increase of 3.6 percentage points in unemployment. The unemployment rate started out at 7.2% at the

More about Macro Essay

Open Document