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    ECO - Analysis of the Business Cycle

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    Analysis of the Business Cycle:

    Go to the web site of the Bureau of Labor Statistics at http://www.bls.gov/ and the Bureau of Economic Analysis (National Economic Accounts) at http://www.bea.gov/national/ or any other data source and collect the most recent 6 months of data on real GDP growth, inflation, and unemployment. Based on this information, write a 3-4 page analysis, of where the economy currently is in the business cycle and the implications for a Monopolistically Competitive firm in terms of prospects for higher sales and labor costs. Support your conclusions with data from the BLS.

    The main objective of this exercise is to get you thinking about the two-edged nature of many economic phenomena so as to present a "balanced" perspective.

    1) In this case, you must analyze the data in detail to show what would happen when the economy is growing and unemployment is low. (For example, show the effects on sales, the costs associated with the effect on sales, etc. for monopolistically competitive firms).

    2) On the other hand, you must also analyze in detail the effects of higher unemployment during a business cycle downturn. (As for example this may mean lower labor costs when adding employees, but lower demand as a result of falling incomes...etc). Relate your analysis to monopolistically competitive firms)

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