ECN 204 Chapter Notes - Chapter 9: Shortage, Market Basket, National Research Universal Reactor
1 Jul 2020
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Business cycle (peak, recession, trough, expansion) - alternating increases and decreases at the level of economic activity. Peak - business activity reaches temporary maximum (full employment, output at or close to capacity) Recession - period of decline in total output, income, employment (lasts 6 months or more) less business activity, declines in real gdp, more unemployment. Trough is lowest point, usually followed by recovery and expansion. Irregular innovation - new products or production methods can quickly spread through the market. Productivity changes - result from changes in resource availability. Monetary factors - banks printing more than expected or less than expected. Political events - peace treaties, war, terrorist attacks. Financial instability - unexpected bubbles or bursts can create shocks. Recession of 2008 partly caused by excessive money, financial frenzy in us. Debt packaged into derivatives and sold to investors globally. Real estate began to drop and mortgage defaults shot up, insurance structure nearly collapsed.
