Eco 100

4 . What can be misleading about the termination `business cycle`The term business cycle refers to the precedent of alternation between expansions (upturns ) and recessions (downturns . The term `cycle implies a well-ordered rule the term `business cycle therefore connotes a regular pattern of expansions and recessions . This is misleading because , in reality , business cycles pass an irregular pattern and better resemble weather fluctuations . No twain business cycles are identical . In event , the duration of business cycles varied from 18 months to 10 long time and 8 months5 . Explain intuitively why the un interlocking rate is countercyclicalA countercyclical stinting quantity is one which is inversely correlated with the general frugal condition . The unemployment rate is countercyclical for it tends to increase during economical slowdowns and decrease during economic expansions .

The increase in engage which characterizes economic expansions drives firms to increase employment on the contrary , the fall in demand feature of speech of slowdowns urges firms to lay off workers6 . Explain why the heap up demand curve is downward slopingAn aggregate demand curve illustrates the veto relationship between the quantity demanded of aggregate output and the aggregate price level . The curve slopes downward due to two factors , both brought about by a swap in the aggregate price level (1 ) the wealth effect and (2 ) the divert rate effect . The wealth effect is due to the change in the purchasing power of assets brought about by a change in the aggregate price level . On a collective note , an increase /decrease in the aggregate...If you want to get a full essay, order it on our website: Orderessay

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