What is macroeconomic business cycle?
Business Cycles Superimposed over long term macroeconomic growth trends, the levels and rates-of-change of major macroeconomic variables such as employment and national output go through occasional fluctuations up or down, expansions and recessions, in a phenomenon known as the business cycle.
What is the political business cycle quizlet?
The political business cycle refers to the possibility that: politicians will manipulate the economy to enhance their chances of being reelected. Assume the economy is at full employment and that investment spending declines dramatically.
Is business cycle a macroeconomic concept?
Business cycles are intervals of expansion followed by recession in economic activity. They have implications for the welfare of the broad population as well as for private institutions. Business cycle fluctuations are usually characterized by general upswings and downturns in a span of macroeconomic variables.
What is the difference between micro and macro economics?
Microeconomics studies individuals and business decisions, while macroeconomics analyzes the decisions made by countries and governments. Macroeconomics takes a top-down approach and looks at the economy as a whole, trying to determine its course and nature.
What are the 4 phases of the business cycle quizlet?
The four phases of the business cycle are peak, recession, trough, and expansion.
What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule?
What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule? The political business cycle describes the idea that politicians may manipulate the economy to serve their own political ends.
What are the three basic areas of economic policymaking?
Policy makers undertake three main types of economic policy: Fiscal policy: Changes in government spending or taxation. Monetary policy: Changes in the money supply to alter the interest rate (usually to influence the rate of inflation). Supply-side policy: Attempts to increase the productive capacity of the economy.
What is political economy example?
The types of a political economy include socialism (which states that any production and wealth should be regulated and distributed by society), capitalism (where private owners control a nation’s industry and trade for profit), and communism (the theory where all property is publicly-owned and everyone works based on …
How is political economy different from economics?
Politics studies power relations and their relationship to achieving desired ends. Philosophy rigorously assesses and studies a set of beliefs and their applicability to reality. Economics studies the distribution of resources so that the material wants of a society are satisfied; enhance societal well-being.
What do you mean by political business cycle?
See Article History. Political business cycle, fluctuation of economic activity that results from an external intervention of political actors. The term political business cycle is used mainly to describe the stimulation of the economy just prior to an election in order to improve prospects of the incumbent government getting reelected.
Which is the perfect hypothesis for the political business cycle?
The “perfect” political business cycle hypothesis would be a fall in the economy in the first 2 years after the election so as to paint a gloomy economic picture, but revive the economy thereafter so as to achieve a more rosy economy with low unemployment and low inflation.
How is the political cycle related to welfare?
Likewise, there is a political cycle found in welfare regimes. Accordingly, the state officials will tend to make the welfare system more generous in the preelection period and to restore restraint and incentives to work afterward.
