ECN 204 Chapter Notes - Chapter 9: Socalled, Hyperinflation, Shortage
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10 Mar 2016
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Chapter 9 business cycles, unemployment, and inflation. Business cycle: recurring increases and decreases in the level of economic activity over periods of years. Economists cite several possible general sources of shocks that can cause business cycles: irregular innovation: significant new products or production methods, such as those associated with the railroad, automobile, computer, and. Firms can postpone the purchase of capital goods, in good times, capital goods are usually replaced before they depreciate completely. But when recession strikes, firms patch up their old equipment and make do. The pattern is much the same for consumer durable such as automobiles and major appliances. Service industries and industries that produce nondurable consumer goods are somewhat insulated from the most severe effects of recession. The quantity and quality of purchases of nondurables will decline, but not as much as will purchases of capital goods and consumer durables.
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