Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 6: Q1. (page 246)

Why do we talk about business cycles for the economy as a whole, rather than just talking about the ups and downs of particular industries?

Short Answer

Expert verified

The fluctuations in the entire economy indicate that the economy is suffering through some universal impact of an economic phenomenon. In comparison, variations in specific industries can be due to different reasons. Therefore, business cycles refer to the economy as a whole.

Step by step solution

01

Implications of fluctuations in particular industries

Ups and downs in specific industries will represent the production and employment of the respective sectors. It does not ensure that the whole economy faces similar economic conditions to declare any business cycle.

The fluctuations in particular sectors can result from industry-specific factors such as availability of raw materials, cost of particular raw materials, availability of labor, strikes, technological advancement, market structure, competition, etc.

02

Implications of fluctuations in the entire economy

Referring to the whole economy, fluctuations in output and employment from almost all the sectors occur in a similar pattern indicating a business cycle. When all the sectors show similar impacts of some economic phenomenon, the economy is understood to be passing through a business cycle.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Why was it profitable for Montgomery Ward to close some of its stores during the Great Depression?

Which of the following reflect comparative advantage, and which reflect macroeconomic forces?

  1. Thanks to the development of huge oil sands in the province of Alberta, Canada has become a BUSINESS CASE exporter of oil and an importer of manufactured goods.
  2. Like many consumer goods, the Apple iPad is assembled in China, although many of the components are made in other countries.
  3. Since 2002, Germany has been running huge trade surpluses, exporting much more than it imports.
  4. The United States, which had roughly balanced trade in the early 1990s, began running large trade deficits later in the decade, as the technology boom took off.

Which of these sound like inflation, which sound like deflation, and which are ambiguous?

  1. Gasoline prices are up 10%, food prices are down 20%, and the prices of most services are up 1– 2%.
  2. Gas prices have doubled, food prices are up 50%, and most services seem to be up 5% or 10%.
  3. Gas prices haven’t changed, food prices are way down, and services have gotten cheaper, too.

Use Figure 6-1 to compare the nature of the Great Depression to the Great Recession. What about the Great Depression made Montgomery Ward’s decision not to expand in the 1940s appear rational?

Many poor countries have high rates of population growth. What does this imply about the long-run growth rates of overall output that they must achieve in order to generate a higher standard of living per person?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free