EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Chapter 10, Problem 2RQ
To determine
To describe:Two main components of theory of business cycle and its description for real business cycle theory.
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What is business cycle in macroeconomics and what are the different components of the business cycles
For the following video please answer these questions.
Business Cycle. http://www.youtube.com/watch?v=TXrOpjG4dUs
1. Refer to your text book and draw and label the Business Cycle. Be able to identify andexplain the four stages of the cycle.
2. State the characteristics of recession and expansion.3. What stage of the business cycle are we in at this time? What facts or data do youknow that support this.4. How does the business cycle influence an individual country’s economy and the actionstaken by its government?
What are the key ideas of the real business cycle model? How does it explainbusiness cycle fluctuations?
Explain in details with the help of graphs.
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- How is the natural rate of unemployment Illustrated in an AD/AS model?arrow_forwardWhat is meant by business cycle? What are the leading and lagging indicators of forecasting a business cycle? Explain with examples.arrow_forwardDraw a graph for economic activity over time that includes all of the partsof the business cycle. Briefly describe the idea of the “great moderation”when it comes to business cycle theory.arrow_forward
- The factor leading to business cycles in the real business cycle theory is represented by changes in the growth rate ofarrow_forwardAnalyse the different components of the business cyclesarrow_forwardWhat is the central idea of the real business cycle theory? A. Fluctuations in economic activity are caused by changes in government policy B. Fluctuations in economic activity are caused by changes in technology and productivity C. Fluctuations in economic activity are caused by changes in consumer spending D. Fluctuations in economic activity are caused by changes in monetary policyarrow_forward
- How do proponents of Real Business Cycle Theory explain thebusiness cycle, and why do they object to government intervention tosmooth the business cycle?arrow_forwardPlot these data points, and identify the four phases of the business cycle. Give a theory that may explain the cause of the observed business cycle. What are some of the consequences of a prolonged decline in real GDP? Is the decline in real GDP from $1,000 billion to $500 billion a recession?arrow_forwardWhat are the two biggest recessions in terms of length and magnitude from the graph, the shaded areas show recession and 2020 is not included? How does the unemployment rate react during the two main recessions you have identified? What was the level of the unemployment rate during the first and the last quarter of negative growth for those two recessions? What do you conclude about the link between recession and the variation in unemployment?arrow_forward
- Economists use the phrase "business cycle" when referring to fluctuations inarrow_forwardComplete the sentence: “According to Real Business Cycle Theories of the business cycle, ___________________ should be highlighted and supported by policies. Group of answer choices Aggregate demand Aggregate supply Aggregate employment Aggregate investmentarrow_forwardConsider the following statements about the business cycle. Which of the following statements is incorrect ? A. A rise in economic activity from the cycle trough to the peak indicates that the economy is in an expansion. B. A fall in economic activity from the cycle peak to the trough indicate that the economy is in a recession. C. The business cycle is a regular fluctuation of real GDP around potential GDP that is predictable. D. The business cycle is a periodic cycle in real GDP and employment.arrow_forward
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