Business Cycles Notes: https://docs.google.com/file/d/0B_gpVfHfuRG2dVVfOUdqTTUxNmc/edit?usp=drive_web

Chapter 12 Section 2

1.  What are the 4 phases to a business cycle? Draw a pictorial representation of a business cycle.

2.  What are the contributing factors to each phase regarding GDP?

3.  What is stagflation?  Why is it a problem when an economy experiences it?

4.  What are the 4 main economic variables that affect business cycles?

5.  How can interest rates push a business cycle into a contraction?

6.  How did the Great Depression affect economists’ beliefs about the macroeconomy?

7.  At what point of the business cycle would you want to be?  In 1-2 sentences explain your reasoning.