1. 14-1, P.P. 375-380,BUSINESS CYCLES, 14-2, P.P. 382-387,UNEMPLOYMENT
MAIN IDEAS:(14-1)THE TERM BUSINESS CYCLE REFERS TO ALTERNATING INCREASES AND DECREASES IN THE LEVEL OF ECONOMIC ACTIVITY; (14-2)FUNCTIONAL, SEASONAL, CYCLICAL, AND TECHNOLOGICAL ARE THE GENERAL TYPES OF UNEMPLOYMENT

2. BUSINESS CYCLES IN THE U.S.
RECESSION PHASES (GDP DECLINES FOR TWO QUARTERS) STARTS AT PEAK, ENDS WHEN AT A TROUGH, THEN, EXPANSION AS ECONOMY RECOVERS.
DEPRESSION-A SEVERE RECESSION WITH MANY UNEMPLOYED AND FACTORIES LYING IDLE.

3. BUSINESS CYCLE (CON’T.)
THE GREAT DEPRESSION-LASTED FROM 1929 UNTIL WWII BEGAN. PANIC CAUSED RUNS ON BANKS AND THE STOCK MARKET.
CAUSES-MANY POOR AND A FEW WEALTHY (INCOME GAP), EASY CREDIT, GLOBAL TRADE FELL OFF.

4. CAUSES OF THE BUSINESS CYCLE
CAPITALEXPENDITURES-AMOUNT OF MONEY BUSINESSES SPEND.
INVENTORY ADJUSTMENTS-CHANGES IN THE LEVEL OF BUSINESS INVENTORY.
INNOVATION AND IMITATION
MONETARY FACTORS-CREDIT AND LOAN POLICIES OF THE FED (FEDERAL RESERVE BANK)
EXTERNAL SHOCK-EXAMPLE: OIL PRICE INCREASES.

5. PREDICTING BUSINESS CYCLES
INDEX OF LEADING INDICATORS-A MONTHLY STATISTICAL SERIES WHICH WILL USUALLY TURN DOWN BEFORE REAL GDP TURNS DOWN.
ECONOMETRIC MODEL-USES ALGEBRAIC EQUATIONS.

6. 14-2, UNEMPLOYMENT MEASURING IT-UNEMPLOYMENT RATE
UNEMPLOYED-PEOPLE WHO MADE AN EFFORT WITHIN THE LAST MONTH TO FIND A JOB.
LIMITATIONS OF THE UNEMPLOYMENT RATE-DOESN’T COUNT THOSE WHO HAVE QUIT LOOKING, PEOPLE CONSIDERED EMPLOYED WHEN HOLDING PART TIME JOBS.

7. TYPES OF UNEMPLOYMENT FRICTIONAL-BETWEEN JOBS;SHORT-TERM UNEMPLOYED
STRUCTURAL-WHEN A FUNDAMENTAL CHANGE IN THE ECONOMY REDUCES THE DEMAND FOR WORKERS AND THEIR SKILLS.
CYCLICAL-RELATED TO SWINGS IN THE BUSINESS CYCLE.
SEASONAL-RESULTS FROM CHANGE IN WEATHER OR CHANGE IN DEMAND FOR A CERTAIN PRODUCT.
TECHNOLOGICAL-AUTOMATION (WORKERS REPLACED BY MACHINES

8. FULL EMPLOYMENT
WHEN UNEMPLOYMENT RATE GOES UNDER 4.5 PERCENT, IT IS CONSIDERED FULL EMPLOYMENT