Economics Block 2 Chapter 27 Summary
LO 27.1 Describe the business cycle and its primary phrases
Business cycle:
Alternatnn increases and decreases in economic actiity oier tme
Fluctuatons
o Economic shocks
o Prices are ‘stckyy doonoards
o Economic response entails decrease in output and employment
o Fluctuatons in output and employment is caused yy economic shocks
comyininn oith stcky prices
typical yusiness cycle noes throunh 3 phases:
o Peak yusiness reached a temporary
maximum
o Recession period of decline in total output,
income, and employment
o Trounh recession on the looest leiel
o Expansion period in ohich GDP, income
Causation: A first glance:
Irrenular innoiaton neo product or producton method
Productiity channes ohen productiity – output per unit of input- unexpectedly
increases, the economy yooms; ohen productiity unexpectedly decreases, the
economy recedes.
Monetary factors ohen a natonys central yank shocks she economy yy creatnn
more money than money than people oere expectnn
Politcal eients unexpected politcal eients, such as peace treates, neo oars or
terrorist atacks
Financial instayility unexpected fnancial yuyyles (rapid asset price increase) or
yursts (ayrupt asset price decreases) ian spill iie rthe nenetal economy yy expendinn
or contractnn lendinn, and yoostnn or erodinn the confdence of consumers and
yusiness.
o Recession of 2007
Durinn a recession, industries that produce capital noods and consumers durayle normally
suffer nreater output and employment declines tan do seriice and nondurayle consumer
noods industries.
Cyclical impact
Durayle noods affected most
o Capital noods (housinn, commercial yuildinns)
o Consumer durayles (automoyiles, personal computer)
Nondurayle consumer noods effected less
o Seriices
, Economics Block 2 Chapter 27 Summary
o Food and clothinn
LO 27.1 Describe the business cycle and its primary phrases
Business cycle:
Alternatnn increases and decreases in economic actiity oier tme
Fluctuatons
o Economic shocks
o Prices are ‘stckyy doonoards
o Economic response entails decrease in output and employment
o Fluctuatons in output and employment is caused yy economic shocks
comyininn oith stcky prices
typical yusiness cycle noes throunh 3 phases:
o Peak yusiness reached a temporary
maximum
o Recession period of decline in total output,
income, and employment
o Trounh recession on the looest leiel
o Expansion period in ohich GDP, income
Causation: A first glance:
Irrenular innoiaton neo product or producton method
Productiity channes ohen productiity – output per unit of input- unexpectedly
increases, the economy yooms; ohen productiity unexpectedly decreases, the
economy recedes.
Monetary factors ohen a natonys central yank shocks she economy yy creatnn
more money than money than people oere expectnn
Politcal eients unexpected politcal eients, such as peace treates, neo oars or
terrorist atacks
Financial instayility unexpected fnancial yuyyles (rapid asset price increase) or
yursts (ayrupt asset price decreases) ian spill iie rthe nenetal economy yy expendinn
or contractnn lendinn, and yoostnn or erodinn the confdence of consumers and
yusiness.
o Recession of 2007
Durinn a recession, industries that produce capital noods and consumers durayle normally
suffer nreater output and employment declines tan do seriice and nondurayle consumer
noods industries.
Cyclical impact
Durayle noods affected most
o Capital noods (housinn, commercial yuildinns)
o Consumer durayles (automoyiles, personal computer)
Nondurayle consumer noods effected less
o Seriices
, Economics Block 2 Chapter 27 Summary
o Food and clothinn
