‘While there is general agreement that the business cycle is associated with cyclical fluctuations in aggregate economic activity, there appears to be differences as to the natural and cause(s) of such fluctuations and

[pic]

CITY BANKING COLLEGE

BANKING ECONOMICS AND LAW

MODULE: MACROECONOMICS POLICY

CAMILA VARHAS E SOUSA

TUTOR: HAMID KHAN

Table of Contents

Question 3

INTRODUCTION 4

DEPRESSION 7

RECESSION 9

CAUSES 10

EFFECTS 10

UNEMPLOYMENT 11

REMEDIES 12

RECOVERY 14

STIMULUS PACKGES 15

BOOM 16

CONCLUSION 18

BLIOGRAPHY 19

QUESTION

‘While there is general agreement that the business cycle is associated with cyclical fluctuations in aggregate economic activity, there appears to be differences as to the natural and cause(s) of such fluctuations and the type and timeliness of policies applied to address critical economic issues during particular stages of the cycles.’ Critically discuss.

INTRODUCTION

The economy of a country have a tendency to grow with the passage of time, but that grow happens irregularly. They oscillate around its long term trends. Burns and Mitchell, (1946) highlighted five main points of the economic cycle. Firstly, economic cycles are not specific variables but are fluctuations of aggregate economic activity. Secondly, in the economic activity are there expansions and contractions. Thirdly, shows that over the economic cycle the economic variables show co-movement featuring patterns usual and visionaries. Fourthly, economic cycles are not periodical but are a recurring cycle and finally, state that the economic cycle is persistent.

To understand we must point out that historically the economy is made up of cycles, this means analysing the current economic performance and compare different situations experienced in the past and future. The economic cycle is characterized by the expansion or contraction of the economy, fundamental to present evidences that the period is well evaluated and thus highlighting the boom,