ECON302 Lecture Notes - Lecture 10: The Sacrifice, Real Wages, Marginal Product
18 May 2016
School
Department
Course
Professor
Document Summary
Business cycle research studies the causes and consequences of the recurrent expansions and contractions in aggregate economic activity that occurs in most industrialized countries. The two most obvious characteristics of business cycles are fluctuations in unemployment and output. Business cycles are fluctuations about trend in real gdp. The turning points in the deviations of real gdp from trend are peaks and troughs. Persistent positive deviations from trends are boom while persistent negative deviations are recessions. Fluctuations in gdp are choppy and have no regularity in amplitude or frequency of fluctuations. Fluctuations in output and hours worked are nearly equal. Consumption and productivity are similarly smoother than output. Capital stock is the least volatile of the indicators: co-movement the correlations between output and other macroeconomic variables. Procyclical variables have positive correlations since it usually increases during booms and decreases during recessions. Countercyclical variables are associated with negative correlations.
