ECON-2006EG Study Guide - Quiz Guide: Procyclical And Countercyclical, Keynesian Economics, Business Cycle
7 Mar 2021
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Recessions are periods in which real gdp falls. Economic fluctuations have three key features: co-movement, limited predictability, and persistence. Economic fluctuations occur because of technology shocks, changing sentiments, and monetary/financial factors. Economic shocks are amplified by downward wage rigidity and multipliers. Economic booms are periods of expansion of gdp, associated with increasing employment and declining unemployment. Three key factors contributed to the 2007-2009 recession: a collapsing housing bubble, a fall in household wealth, and a financial crisis. Growth, even for the most developed economies, is never completely steady. There are periods of good times and bas, of ups and downs. These fluctuations tend to be hard to predict. We refer to short-run changes in the growth rate of real. Real dollars hold the overall price level fixed, implying that the effects of inflation are removed from plots of real variables. Economists also focus on fluctuations in the annual growth rate of gdp.
