Ch.12+notes&hw

Notes CH. 12.2 pages 310-316 Jevon had a teary about the sun spot theory, which was, when the crops would either have a surplus or shortages. But business cycles of the four major intreats to macroeconomists, who study their causes and effects. Periodic swings in economic performance are viewed by, how we describe them, what might cause them, and how they have shaped the countries economy. A business cycle is a period of macroeconomic expansion followed by a period of contraction. Four phases in a business cycle include, expansion, a period of economic growth as measured by a rise in real gdp. (plentiful jobs), Peak, the height of an economic expansion, when real GDP stops rising. Contraction, a period of economic decline marked by falling real GDP. (unemployment rises) Trough, the lowest point in a n economic contraction, when real GDP stops falling. Economist used different characteristics and levels of severity, Recessions, depression,and stagflation. Recession, is a prolonged economic contraction. Depression, a recess that is especially long and severe. Stagflation, a decline in real GDP combined with rise in the price level. Business cycles are affected by four main economic variable, business investment, intreats rates and credit, consumer expectations, and external shocks. business investments, the industries that produce apical goods slow production down and begin to lay off workers.The downward spiral picks up sped, and we find ourselves in a recession. Interest rates and credit, Result of rising intreats rates is the less output and employment in the industries producing consumer and business goods. consumer expectations,fears of a weak economy cause consumer confidence to fall, meaning that a majority of pole expect the economy to begin contracting. This will reduce the spending, or they can be influenced to begin making purchases. External shocks, most difficult to predict. oil supply, wars, and droughts are examples. Positive shocks tend to shift the as curve to the right, lowering the price level and increasing real GDP. Leading indicators, are a key of economic variables that economists use to predict a new phase of a business cycle.

1. The phase that can lead us into recession is, Trough. Because its the lowest point in a n economic contraction, when real GDP stops falling. 2. Interest rates push business cycles into contraction by, having a Result of rising intreats rates they would have less output and employment in the industries producing consumer and business goods. 3. Stock market is the lead indicator because they realized that when the stock mark crashed noon had money to spend or no one wanted to spend. 4. The great depression made people realize that many characteristics take effect when you want to realize how the world is doing economically, and when they saw all the different influences that the great depression had to go through they saw that everything influences the worlds economy. 5. I would rather be at the trough, because there will always be a way out of a recession. All thought no one has jobs it would be better to be at the bottom and work your way up then be at the top and wait for the devastating effect to take place. 6. This question was done on a piece of paper because i don't know how i would be able to illustrate it in writing.