Business Cycle
Peak: temp. max output and full emp.
Recession: dec. in output, income, emp, and trade
Trough: bottom of recession
Recovery: output and emp. expand towards full emp.
Causes of Business Cycle
-irregular innovation triggering Ig or C
-level of aggregate spending (rGDP, or AD)
-wars or expansion of money supple
Non- cyclical Fluctuations
-seasonal variations (tourism, farmers, etc)
-housing, secular trends
Cyclical Fluctuations
-durable goods and construction experience largest impact by cyclical fluctuations because these purchased can be postponed
Frictional Unemployment
have skills but trying to find a new job
Structural Unemployment
change in skills demand leaves you lacking those skills
Cyclical Unemployment
because of a recession
Labor Force
NOT included: under age 16, institutionalized
ARE included: over 16, willing and able to work
Unemployment Rate
-percentage of labor force not employed
- (Unemployed / labor force) x 100
-employed = part time workers
-not employed= discouraged workers (not seeking work)
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