Economic cycle: essence, phases, types

Lecture 11-12

Topic: Economic cycle. Unemployment and inflation

Lecture outline:

Economic cycle: essence, phases, types. History of concept

Unemployment: essence, reasons, types

Inflation: essence, reasons, types

Economic cycle: essence, phases, types

Economic cycle is constant changing (fluctuations) in the level of the production, employment, income in a short and long terms of the economy

Also it is predictable long-term pattern changes in national income. Traditional economic/ business cycles undergo four stages: expansion, prosperity, contraction, and recession. After a recessionary phase, the expansionary phase can start again. The economy goes through temporary ups and downs over time. This behavior is called the “business cycle”. The temporary decrease in business activity and fall in income is called a “recession”. Temporary boom times are called “expansions”.

The phases of the business cycle are characterized by changing employment, industrial productivity, and interest rates. Some economists believe that stock price trends precede business cycle stages.

Circle illustrates changes in the each phase of the economic cycle.

In economics, there are different types of the economic cycle types: short –term cycle and long waves cycle( Kondratiev waves) are described as sinusoidal-like cycles in the modern capitalist world economy

Averaging fifty and ranging from approximately forty to sixty years, the cycles consist of alternating periods between high sector al growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics.

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