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Expansion
Peak
Recovery
Recession
Trough/
Slump
0 Time
Is a period of time containing a single boom and
contraction in sequence.
Peak/ Boom
It is the peak of the business cycle. Highest point of current
economic growth. Inflation pressure is high with low
unemployment.
Recession
A period of decline in output, income and employment.
Trough/slump
Is the opposite of boom. Reach the lowest production in
recent time. Unemployment is high.
Recovery
Is a time when the economy becomes stronger and there is an
upturn in the business cycle.
More jobs are created and more goods and services are supplied
by businesses.
Expansion
Economy growth at a faster rate.
Output growth higher than sustainable level.
Unemployment occurs when those who are labour
force are without jobs and is actively seeking jobs
Workers preference
Flows of information in labour market is imperfect
Hence, workers need time to match jobs that they
prefer and suit their abilities
Frictional unemployment
Remedies
There will always be individuals between jobs
but measures to cut the search time involved
will invariably reduce frictional
unemployment.
Improving the flow of information with regards
to the availability of particular employment is
one such measure as is a reduction in
unemployment benefit.
Structural unemployment
Is unemployment caused by structural
change in economy that eliminate some
jobs in the economy and created some
jobs that unemployed are unqualified
Long-term unemployment
Example: Change in Malaysia economy
structure from agriculture to industrial in
1980s had causes structural
unemployment
Structural unemployment
Remedies
The remedy for structural
unemployment involves retraining those
made redundant in the skills required
by the developing industry and
possible relocation to other areas.
Natural unemployment
Natural unemployment rate is referred to as that part of
unemployment viewed as being unavoidable and exists
when the economy is operating at the full employment
level of real GDP
Cost-push inflation
Import-induced inflation
Profit push inflation
Currency inflation
Happens when the level of aggregate demand grows faster
than the underlying level of supply
Too much money chasing too few goods, prices are forced
up, therefore causing inflation
Increase in investment