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ECON 2HH3 (13)

Chapter 03.pdf

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Marc- Andre Letendre

Stephen D. Williamson Macroeconomics Canadian Edition Chapter 3 Business Cycle Measurement Copyright © 2007 Pearson Education Canada Hafiz Akhand Outline • Regularities in GDP Fluctuations • Comovement • The Components of GDP • Nominal Variables • Labour Market Variables • Comovement Summary Copyright © 2007 Pearson Education Canada 3-2 Learning Goals After studying this chapter, you will be able to – Explain the defining features of business cycles – Describe key business cycle facts – Describe the nature of comovements among various macroeconomic time series Copyright © 2007 Pearson Education Canada 3-3 Regularities in GDP Fluctuations • Business cycles are fluctuations about trend in real GDP • Key features of business cycles are: – Peak – Trough – Turning points – Amplitude – Frequency • Figure 3.1 illustrates these features (Continued) Copyright © 2007 Pearson Education Canada 3-4 Regularities in GDP Fluctuations (Continued) • Figure 3.2 shows business cycle fluctuations in real GDP for Canada during 1961 – 2005 • Figure 3.2 indicates that the deviations from trend in real GDP are: – Quite choppy • Fthe amplitude andows that frequency of fluctuations in real GDP are irregular (Continued) Copyright © 2007 Pearson Education Canada 3-5 Comovement • Comovement describes how aggregate economic variables move together over the business cycle • Comovements between real GDP and another macroeconomic variable can be characterized as – Procyclical, or – Countercyclical, or – Acyclical Copyright © 2007 Pearson Education Canadatinued) 3-6 Figure 3.3
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