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Stages of the business cycle

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2) What are the four stages of the Business Cycle? Compare and Contrast five internal and external Business Cycle theories.

Prepare a diagram showing how the movement in any combination of the components of GDP (Gross Domestic Product) can lead to business cycles.

What is the relationship between and among the U.S. national debt and government policy targets for unemployment and inflation?

Focusing on the Demographics of the U.S. and European populations, what policy recommendations would you offer to increase labor productivity and why is this important?

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Business cycles, government deficits, and the business cycle

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The four stages of the business cycle are growth (expansion), peak, recession (contraction), and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations. But today business cycles are widely known to be irregular - varying in frequency, magnitude and duration.

Remember that GDP = consumption + investment + government spending + (exports − imports)
See if you can imagine how each of these components could interact with the business cycle. For example, if consumption falls, businesses which were experiencing prosperity will begin to notice falling revenues. They will lay off employees, which will cause further declines in sales for other businesses. This is the critical link that Keynes blamed for the Great Depression. Keynesian macroeconomics suggests that in order to recover from depressions or recessions, a stimulus to aggregate demand is required. Examples of measures to bring this about are: increases in government expenditure, reductions in taxation, ...

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