Assignment: Analysis of the Business Cycle Essay Sample
Economic fluctuations are the rise and autumn of economic activity relation to the long-run growing tendency of the economic system. U. S. Economic Fluctuations has two stages one is the periods of enlargement and other is the contraction. The period of contraction includes recession and depression. Recession is mild contraction. a period of diminution in entire end product and employment normally enduring at least two back-to-back quarters. Depression is crisp lessening in the nation’s entire production accompanied by high unemployment enduring more than a twelvemonth. Time periods of enlargement Begin when economic activity starts to increase and continues until the economic system reaches a extremum. Now let us analyse the information taken authorities websites given above Harmonizing to the concern rhythm theory an economic system that undergoes no existent growing for a period of six months or more is technically in recession. From seeing the table 1 of existent GDP growing rate we can state that recession started from 3rd one-fourth of 2008 when the existent GDP growing rate was -2. 7 % and continues till the fourth one-fourth with -5. 4 % negative growing of existent GDP. At this point the U. S. economic system was announced officially in recessive stage ; the current status of GDP is that it is that it has taken a positive tendency from 3rd one-fourth of 2009 with 5 % growing rate.
The latest information on GDP existent growing rate shows a positive but diminishing growing rate from 5 % to 1 % . this has happened because of the debt crises USA is confronting from last 2 months. dollar value has gone down from AAA to AA. but we can state that the recovery stage has already started in United States. Postpone 2 and 3 shows the rising prices rate and unemployment rate. During this recession the unemployment rate is high and rising prices rate is low through this graph and table 2. The rising prices rate is negative in July 2009 and the unemployment rate is highest with 9. 5 % in June 2009. In the twelvemonth 2010 till the July unemployment rate has diminution and stood at 9. 5 % whereas the rising prices rate became positive but still lower at 0. 1 on an norm in June 2011. From the Table 2 and 3 for rising prices rate and unemployment rate we can see the tendency of positive growing. When rising prices rate is picking up and the unemployment rate is traveling down from 10 % to 9 % . Table 4 depicts the consumer assurance index ; it shows measures the grade of optimism of consumers towards the economic system.
This is calculated with the aid of consumers salvaging and passing tendency. The consumer assurance index is demoing positive tendency from October 2009 through February 2011. but once more diminishing since so. Overall non bad. and shows that the consumers have started disbursement on goods and services which will ensue in the addition in aggregative demand. Table 5 and 6 give the information of other variables such as consumer disbursement. concern investing. authorities disbursement. exports. imports. and involvement rate. Traveling through these informations I have realized that the mark of recovery has started from the last months of twelvemonth 2009 because the per centum alteration in net exports have increased. the consumers disbursement is positive from the 3rd one-fourth of 2009. the authorities disbursement is negative which means authorities has spent less during these months. The involvement rate is 3. 25 % invariable for last 12 months and there is a per centum addition in import points once more proved that the income of the Americans has increased. Analysis on Monopolistic Market Structure
The concern rhythm fluctuations affect all type of market construction. here we will discourse the effects of concern rhythm on monopolistic house how it incurs losingss and additions net income throughout the concern rhythm. The two monopolistic companies I have chosen are 1 ) the eating house and 2 ) the cocoa company. Both the companies come under monopolistic market construction because of the presence of big figure of houses and the free entry and issue. differentiated merchandise etc. During the economic roar the demand for merchandise is high and therefore a house can gain positive economic net incomes due to increased demand. really during this clip the demand for labour is besides high therefore increasing the cost of input. but since the demand for goods is high the house can gain positive economic net income alternatively of high cost of labour we can see how with the aid of diagram. The figure 1 shows the monopolistic house in the period of enlargement. due to increase in demand and higher production the mean fixed cost is low and may be the mean variable cost is higher due to increase in the demand for labour but. the net consequence would be the lower mean cost or due to the high monetary values the mean gross is more than the mean cost. In any of the fortunes the house is gaining positive economic net income shown with the aid of Grey shaded rectangle.
Now allow us see the state of affairs in the period of recession and recovery. In recession the labour cost is low. but the demand for the merchandise is besides low therefore the production degree is besides low due to this the mean fixed cost is high which makes the mean cost high. On the other manus it might besides be possible that though the mean cost is low due to low cost of input but the more intense lower demand for merchandise makes the monetary value of the merchandise lower than the mean cost. In both the fortunes the monopolistic would be incurring loss as shown in the graph below. We can see the losingss in the Grey shaded country ( figure 2 ) . how due to high mean entire cost and lower monetary values are doing loss to the house. The informations given by BLS shows that the unemployment is high this is because of the lower production by houses due to lower demand. Now the current state of affairs is that the GDP is turning positively. the aggregative demand has shifted towards right. that means the demand for the monopolistic merchandises like nutrient points. cocoas. and haircut will besides increase.
This addition in demand for monopolistic merchandises will switch the demand curve of the industry towards right due to the addition in income determiner of demand. The addition in demand will increase the monetary value small spot and the house once more will get down gaining normal net income and may be super normal net income in roar period. Since current state of affairs of the economic system is bettering so there will be betterment in the stock public presentation. the betterment in the stock public presentation will increase the demand and therefore will increase the end product. The derived demand of labour will besides increase due to increase in the production goods and services which has caused due to increase in aggregative demand. Current and future gross revenues gross will decidedly increase since the economic system is in the recovery stage of the concern rhythm. The present gross revenues gross and the hereafter gross revenues gross will increase as the economic system goes from recovery to top out stage of merchandise rhythm. The addition in production degree will increase the hiring of labours from the market.
Mention
Anderton. Alain 2004. Economicss. ( 3rd Ed ) Cause manner imperativeness limited. Lancs. Bureau of labour statistics. rising prices and monetary values available at hypertext transfer protocol: //www. bls. gov/data/ retrieved on 26th August 2011
Frank & A ; Bernanke. 2007. Principles of Economics ( 3rd Ed ) McGraw-hill Publishers. New York. Hirschey. Marks ( 2007 ) . Economicss for Managers. United States. Thomson south-western Publishers.
Mankiw. NG ( 2004 ) Principles of Economics 3rd Ed. Thomson South Western.
United States. Thomson south-western Publishers.
National economic histories. available at World Wide Web. bea. gov/national retrieved on 26th August 2011 The Federal Reserve. Bank Prime Loan. available at hypertext transfer protocol: //www. federalreserve. gov/releases/h15/update/ retrieved on 27th grand 2011.
Consumer Confidence Index. available at hypertext transfer protocol: //future. aae. wisc. edu/data/monthly_values/by_area/998? area=US & A ; tab=sales & A ; grid=true retrieved on 27th grand 2011.
