The document summarizes key concepts related to the business cycle and macroeconomics. It defines phases of the business cycle like peaks, recessions, troughs, and recoveries. It also defines related terms like unemployment, inflation, fiscal and monetary policy tools. Charts are included to illustrate the business cycle and measures like the unemployment rate.

1. PREPARED BY :
N U R A MI R A B I N T I MD
L AZI
30D L S 12F 1030

2. Upward and downward
movements
Measured by
considering the growth Wake like movement in
rate of real gross economic activity
domestic product
Expansion and Economy-wide
contraction in a business fluctuations in
cycle are self-reinforcing production or economic
and cumulative in effect activity over sveral
months or years

3. Economy full
Peek /Boom A prosperity period
employment
Could be situation where
Economy experience a
the number jobs more
high level of output
than the number of More investment from
and trade,higher
workers- lead to increase business optimism
employment levels and
in wages,price,interest
income
and profit

4. Recession
Decline in consumption A decrease in yhe
expenditure and volume of output,trade
investment level and transactions
A reduction in aggregate
income in terms of wage An increase in the level
and profit of unemployment

5. Minimum point Will last until there
Trough recession ends(real is an increase in real
GDP stops falling) GDP
Period of great Unemployment The overall
suffering and rates will be higher economic activity
hardship facing by and will create will fall to the
society many problems lowest level
The worst phase pf
business cycle

6. Recovery
Period of revival leading to an upturn of the
economy
Initiated by government expenditure,changes
in production techniques,new innovations and
exploitation of new sources technology
Government expenditure stimulate the
demand for consumption of goods
Employment level,output,income,wages,price
and profit start to increase

7. Peak
Output – maximum level Unemployment – lowest level
Recession
Output - declines Unemployment - increase
Trough
Output – minimum level Unemployment – highest level
Recovery
Output – increase Unemployment - declines

8. • A situation where labour force participants
Definition are available and willing to work but are
unable to find jobs.
unemployment
• A percentage of the labour force who are
Unemployment unemployment and are actively seeking jobs
• UR (%) = Number of unemployment/Labour
rate force X 100%
• The situation in the economy where al
Full available resources are employed to
produce goods and service
employment

9. • Occurs when people are in between jobs,entering and reentering the labour force
• Ex : peolple quit their jobs for a better positions or higher wages or when fresh
Frictional graduates are actively seeking for a job
unemployment
• Occurs when there is a lack of jobs because of a downswing in a business cycle or a
recession
Cyclical • Companies close down and the workers are laid off
unemployment
• Arises due to structural changes in the economy of a country
Structural • Respon quickly meet changing demands,technological or comprtition
unemployment
• Arises due to seasonal variation in the activities of particular industries
Seasonal • Caused by climatic changes,fashion or inherent nature
unemployment

10. Effect of unemployment Effect on the economy
Effect on individuals and Loss in government revenue
society obtain from personal taxes
Loss of income and self Reduce development
respect activities of the economy
Lead to slow economic
Loss of job skills
growth and low output
Socials and political
problems

11. Monetary policy Fiscal policy Direct control measures
Open market operation – Purchase Providing training and technical
Decrease in taxes
of securities or short term bonds education
Increase in government
Lowering the reserves requirement Development of new land
expenditure
Job creation in varios sectors in an
Lowering the discount rate
economy
Lowering the interest rate

12. • A continuous increase in the general price
level of goods and services in the economy
• Deflection- a decrease in the general price
level of goods and services in the economy
Definition • Stagflation- when an economy experiences
high unemployment and rapid inflation
simultaneously
• Inflation rate= CPI this year – CPI previous
year/CPI previous years X 100
Measure • CPI (index that measure changes inn the
average price of consumer goods and
services
inflation • Disinflation a reduction in the rate of
inflation

13. Demand-
pull • When aggregate demand cannot meet the
aggregate supply
inflation
• Increase in the general price level associated
Cost- with an increase in the cost of production
• Factors
push • 1)Wage-push inflation
• 2)Profit-push inflation
inflation • 3)Import –push inflation

14. Balance of Distribution
trade of income
Production Savings

15. Monetary Direct control
Fiscal policy
policy and rationing
Open market
operation-selling Price control and
Increase in taxes
of securities or rationing
short term bonds
Raising the Decrease in
Anti-hoarding
reserve government
campaign
requirement spending
Raising the Compulsory
discount rate savings
Raising the
interest rate
Selective credit
control policy