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    phases, indicators, measures, economic evolution, outlooks

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    Please address the following questions.

    1. Distinguish between a recession and a depression and indicate which you believe the US economy is in now. When did it start and explain why it occurred.

    2. Pick the two factors cited in The Economist article that you think will have the most impact on future business cycles and explain why they are the most impactful and whether you think they will contribute to more severe or less severe business cycles.

    3. Is the business cycle dead? Explain.

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    Solution Preview

    1. The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out.

    The term depression is often used to refer to a particularly severe period of economic weakness. Some economists use it to refer only to the portion of these periods when economic activity is declining. The more common use, however, also encompasses the time until economic activity has returned to close to normal levels. But, the BCDC at NBER does not recognize the term.

    Currently the US is in the longest post-War recession that began in December 2007.

    There are multiple theories of why this occurred but the most commonly cited reason is the bursting of the housing bubble. This led to ...

    Solution Summary

    An overview synopsis is made of phases, indicators, measures, economic evolution, outlooks.