ECON 203 Lecture Notes - Lecture 5: Business Cycle
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3 Feb 2020
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Chap 5: output, business cycles, growth and employment. Important maroeconmic variables: rate of inflation, output, the unemployment rate. While real gdp/capita has risen about eight-fold since the start of the 20th century, it has not risen consistently every year: these alternating periods are called the business cycle. Note on employment rate: employment rates provide the different perspective on labor market conditions because they are not affected by changes in the participation rates as unemployment rates. If people become discouraged and stop looking for work => participation rate, labor rate, and unemployment rate change (decline) but employment rates is unchanged. The effect of the business cycle on inflation. Inflation rate measures the change in the price level from 1 year to the next. During the expansions, demand for products in high relative to supply, resulting in price increasing => high inflation.
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