Question

1. List the 4 phases of the business cycle.

Which phase are we in right now?

What evidence do you have to support your theory?

Describe who is in the labor force.

Who is not included in the labor force. In the past 20 years or so, the baby boom generation has been retiring. It is estimated that 10,000 turn 65 years old every day in the US. In addition, record numbers of workers gave up looking for jobs in the 2008-09 recession. How do these demographic and cultural changes affect the unemployment rate?

Answer 1

Answer:The business cycle is the natural rise and fall of economic growth that occurs over time.The cycle is a useful tool for analyzing the economy.It can also help you make better financial decisions.

The duration of a businees cycle is the period of time containing a single boom and contraction in sequence.The time it take to complete the sequence is referred to as the lenght of the business cycle.

Each business has 4 phases we will discuss it simultaneously:

1)Expansion:During Business cycle expansion economy is growing.The economy can remain in this phase for years as long it is well managed.During this phase people will earn more and spend more.Incease consumer is good for business and this increase spending leads to more revenue and potentially more profit for businesses.

2)Peak:A peak in the business cycle is the second phase.This is the highest point of the cycle.Employment is a full capacity and economy is producing at the maximum output.Beyond this point,the economy overheats and transitions to the contraction phase.Overheating means manufacture can no longer meets demand.They can't maintain output even if they add more workers and production capacity.As factories find themself unable to cope,production may go down further.Inflation may result as there are fewer goods available and seller charges more.

3)Contraction:During this phase,the economy is weakning.If economic activity contracts enough,the economy falls into recession.The economy is said to be in recession if if Gross Domestic Product decline consecutively for two quarters.

4)Trough:It was given this name since the economy hits bottom during this phase.Fortunately,it also marks the point where economy start to move back to the expansion phase.

Current Business Cycle Phase in the US

Things are challenging and same around the world during this pandemic period.But before if we use economic data,its easy to identify that we are in expansion phase of the business cycle.The length of expansion period constantly increased since the 1990s.In 2007,hopes of a continous expansion were crushed as the US fell into the deepest recession since the Great Depression.This recession became known as the Great Recession,and it prooved business cycle was alive and well,but this doesn't mean expansion are not changing.Expansion are getting longer.In addtion to being a long expansion,our current expansion is much slower than usual.Since 2009,we have seen average GDP growth of only 2.1% while previous expansions saw growth to close 3%.Slow gorwth have made this economy very stable and kept inflation at bay, but it has also left investors feeling less than thrilled about their returns.

Affect on Unemployment due to Demographic & Cultural Change

The specific trends in the age composition of workforce mary wary with future time periods and are subjects to uncertainity related to labor force participation rates.The aging of population is largely result the boom in births during the 1946-64 period.Over the coming decade(through 2005),substantial growth will occur among 45-64 year olds,but the number overage 65 year old will increase modestly(5%).However,between 2005 and 2010,the population of 65-69 years olds will increase by 17% and then explode by 37% in the 2010-20 period.These figures translate into labor participation rate a big question mark.

Findings indicate that differences in culture explain differences in unemployment duration on the order of 20%.Moreover,findings are horizontal transmission of culture is more important than vertical transmission of culture and that culture is about as important as strong changes to benefit duration.

Skilled workers coming in US for better job opportunities and grab good and lucrative job more easily than a native american who are not skillful on Compurters,Programing etc.Slowly but gradually it become a major source of unemployment among native Americans.