ECO/372T: Principles Of Macroeconomics Wk 2 Discussion

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Wk 2 Discussion – Business Cycles [due Day 3]

Respond to the following in a minimum of 175 words: 

The business cycle represents the short-term changes experienced in the economy due to changes in levels of economic activity. 

  • Summarize the 4 different phases of the business cycle. 
  • List and explain three types of unemployment.
  • Discuss unemployment in different phases of the businesses cycle
  • Find the most recent unemployment rate of your state (be sure to cite your source).
  • From a personal perspective, can you explain your view of the current job market in your local area?

The four key stages of the business cycle are trough, expansion, contraction, and contraction.

The variations in the economy between periods of expansion and contraction are referred to as the business cycle. The aggregate demand is used to assess the economic cycle’s current phase using parameters including interest rates, GDP, and employment levels.

The most significant aspect of the business cycle is expansion, and expansion periods are when the economy is most favorable. Industries with rapid development frequently experience inflationary pressure and minimal output expansion. The expansionary phase of the business cycle may be created if the government adopts an expansive fiscal policy.

A business cycle peaks when growth reaches its highest rate. Peak growth in the sector causes various economic imbalances that need to be fixed.

In a phase of recession, when growth slows, employment declines, and prices remain stable, a correction takes place. Negative demand, a supply shock, or the contractionary monetary policy undertaken by the monetary authority are all possible causes of contractionary monetary policy.

1. Structural unemployment. When there is a gap between the abilities you possess and the skills employers need, structural unemployment results.

2. Cyclical unemployment. The economy’s upward and downward oscillations, or its cycle, are related to cyclical unemployment.

3. Frictional unemployment. Simply expressed, the period of time between jobs under normal conditions is known as frictional unemployment. Frictional unemployment does not signify any form of significant changes, such as your skills being obsolete due to an industry shift or layoffs being required by a bad economy.

During business-cycle recessions, unemployment rises, and during cycle expansions, it falls (recoveries). When there is a recession, inflation falls, and when there is an upswing, it rises (recoveries).

A 0.1 percentage point drop from April 2022 brought the seasonally adjusted Texas unemployment rate to 4.2 percent. (Woellner, 2022)

The two main seasonal sectors in Texas are stated to be education and retail, and these are the variables that affect the employment trend in the state. It is necessary to invest in infrastructure, strengthen tax laws that stimulate hiring, evaluate the minimum wage level, implement educational reforms, and other measures in order to increase the employment rate.