The Theories of International Business Cycle - Assignment Example

Macroeconomics Contents Question 10 3 Answer 3 Answer 2 4 Answer 3 4 Answer 4 5 Question 11 6 Answer 6 Answer 2 7 Question 12 8 Answer 8 Answer2 8 Answer 3 9 Answer 4 9 Answer 5 9 Answer 6 10 Question 13 10 Answer 1 10 Answer 2 11 Question 14 12 Answers 1 12 Answers 2 12 Answers 3 13 Answers 4 13 Works Cited 15 Name of the University Name of the Student Course No. Date Macroeconomics Question 10 Answer 1 The theories relating to Business Cycle concentrates on the aggregate demand (AD) in an economy. It elaborates the short run booms or recessionary stages of the economy. AD is the gross demand generated within an economy through consumption spending (C), government expenditure (G) and investment expenses (I). Figure 1: Business Cycle (Source: “The International Business Cycle”) The above graph explains a typical business cycle, where the boom, trough or downswings occur due to differences in (AD) and aggregate supply (AS). When the AD>AS, then economy lies in the expansion or boom stage of business cycle. On the hand, recession exists when ADAS), instead of increasing the price levels, produces can exceed supply over demand. On the other hand during recession (AD Read More