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Chapter 7

ECN 204 Chapter 7 Notes.docx

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Ryerson University
ECN 204
Amy Peng

ECN 204 Chapter 7 Notes The Business CycleThe term business cycle refers to alternating rises and declines in the level of economic activity sometime over several yearsPeak is a phase in the business cycle when the economy is at full employment and the level of real output is at or very close to the economys capacityRecession is a period of decline in total output income and employmentThrough is a point during the recession or depression when output and employment reach their lowest levelsExpansion is a period in which real GDP income and employment rise toward full employment Cyclical Impact Durables and Nondurables o Consumer Durables are products affected most by the business cycle Ex automobiles and refrigerators o Nondurable Consumer goods are somewhat insulated from the most severe effects of recession Ex food clothing medical and legal services UnemploymentMeasurement of Unemployment o One group is made up of people under 15 years of age and people who are institutionalized Ex psychiatric hospitals or correctional institutions o The second group is labeled Not in the labor force it is composed of adults who are potential workers but are not employed and are not seeking work Ex homemakers fulltime students or retirees o The third group is the labor force which are persons 15 years of age and older who are not in institutions and who are employed or are unemployed and seeking work o The Unemployment Rate is the percentage of the labor force that is unemployed Unemployment Rateunemployedlabor force x100 o Discouraged Workers are people who have left the labor force because they have not been able to find employment
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