Podcast
Questions and Answers
What is a significant characteristic of the business cycle in both industrialized and developing economies?
What is a significant characteristic of the business cycle in both industrialized and developing economies?
- Fluctuations occur only in wealthy nations.
- Unemployment is one of the major economic problems. (correct)
- Economic fluctuations can be explained by a single universal theory.
- Economic activities remain stable throughout the years.
Which phase of the business cycle is defined by business activities reaching their maximum?
Which phase of the business cycle is defined by business activities reaching their maximum?
- Peak/Prosperity (correct)
- Recession
- Trough
- Recovery
What typically follows the Peak/Prosperity phase in the business cycle?
What typically follows the Peak/Prosperity phase in the business cycle?
- Stagnation
- Expansion
- Recession (correct)
- Trough
Which of the following accurately describes a feature of the recession phase?
Which of the following accurately describes a feature of the recession phase?
What can obstruct a country's economic growth during the business cycle?
What can obstruct a country's economic growth during the business cycle?
Which economic issue is equally prominent in both highly industrialized and developing countries?
Which economic issue is equally prominent in both highly industrialized and developing countries?
What is a common consequence of a recession in an economy?
What is a common consequence of a recession in an economy?
Which statement best captures the essence of economic fluctuations?
Which statement best captures the essence of economic fluctuations?
Which of the following groups is considered outside the labor force?
Which of the following groups is considered outside the labor force?
What type of unemployment occurs when workers' qualifications do not match available jobs?
What type of unemployment occurs when workers' qualifications do not match available jobs?
What best describes a characteristic of structural unemployment?
What best describes a characteristic of structural unemployment?
Which of the following scenarios exemplifies structural unemployment?
Which of the following scenarios exemplifies structural unemployment?
Which demographic is likely to be part of the labor force?
Which demographic is likely to be part of the labor force?
What is the primary reason for the outflow of Filipino workers to other countries?
What is the primary reason for the outflow of Filipino workers to other countries?
Which group may face challenges due to a lack of relevant skills?
Which group may face challenges due to a lack of relevant skills?
Which factor is NOT associated with being outside the labor force?
Which factor is NOT associated with being outside the labor force?
What was one of the historical factors that led to the opening of the labor market to Middle Eastern countries?
What was one of the historical factors that led to the opening of the labor market to Middle Eastern countries?
What is the Labor Force Participation Rate?
What is the Labor Force Participation Rate?
How is the unemployment rate defined mathematically?
How is the unemployment rate defined mathematically?
What demographic does the 'labor force' include?
What demographic does the 'labor force' include?
What impact does unemployment have on Philippine society?
What impact does unemployment have on Philippine society?
What was a significant issue during President Arroyo's administration that impacted the economy?
What was a significant issue during President Arroyo's administration that impacted the economy?
What does a high unemployment rate signify for a country?
What does a high unemployment rate signify for a country?
What is a reason why the Philippines continues to rely on foreign labor markets?
What is a reason why the Philippines continues to rely on foreign labor markets?
What challenge do Filipinos face by working in foreign countries?
What challenge do Filipinos face by working in foreign countries?
Which phase is characterized by a deep recession in the business cycle from 1990 to 1997 in the Philippines?
Which phase is characterized by a deep recession in the business cycle from 1990 to 1997 in the Philippines?
Endogenous theories of business cycles focus on which type of causes?
Endogenous theories of business cycles focus on which type of causes?
According to Wesley Mitchell, how does one phase of the business cycle relate to the previous phase?
According to Wesley Mitchell, how does one phase of the business cycle relate to the previous phase?
What does the underconsumption theory attribute to the business cycle?
What does the underconsumption theory attribute to the business cycle?
What is a potential outcome of a crisis phase in the business cycle?
What is a potential outcome of a crisis phase in the business cycle?
Which of the following explains the business cycle as a series of cumulative changes?
Which of the following explains the business cycle as a series of cumulative changes?
What effect does aggressive investment planning have on purchasing power?
What effect does aggressive investment planning have on purchasing power?
What does innovation contribute to in the context of the business cycle?
What does innovation contribute to in the context of the business cycle?
What is a potential outcome of too many producers entering an industry?
What is a potential outcome of too many producers entering an industry?
Which period shows a recovery following the deep recession in the business cycle of the Philippines from 1990-2009?
Which period shows a recovery following the deep recession in the business cycle of the Philippines from 1990-2009?
What might happen if savings in a society are not invested, according to the content?
What might happen if savings in a society are not invested, according to the content?
According to the monetary theory, what should a Central Bank do if inflation threatens the economy?
According to the monetary theory, what should a Central Bank do if inflation threatens the economy?
What do exogenous theories of the business cycle focus on?
What do exogenous theories of the business cycle focus on?
What is the consequence of the Central Bank accelerating money growth after inflation is no longer a threat?
What is the consequence of the Central Bank accelerating money growth after inflation is no longer a threat?
What does the underconsumptionist theory criticize about the role of savings in the economy?
What does the underconsumptionist theory criticize about the role of savings in the economy?
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Study Notes
Business Cycle
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The business cycle is a characteristic of industrialized and developing economies, marked by cyclical fluctuations in economic activity.
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The business cycle consists of four main phases: peak/prosperity, recession, trough, and recovery.
Phases of a Business Cycle
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Peak/Prosperity is characterized by maximum business activity, full employment, and rising prices.
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Recession is characterized by a decline in total output, income, trade, and employment.
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Trough is the lowest point of economic activity in a business cycle.
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Recovery is a period of increasing economic activity following a trough, with a gradual increase in production, employment, and consumer spending.
Theories of Business Cycle
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Endogenous Theories attribute the causes of business cycles to factors internal to the economy.
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Real Structural Hypothesis (RSH) suggests that aggressive investment plans and import dependence can lead to structural imbalances and economic downturns.
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Innovation Theory argues that innovation drives business cycles, with new innovations leading to increased profits, attracting new entrants, and eventually leading to overproduction and a downturn.
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Self-Generating Theory proposes that each phase of the business cycle is a product of the preceding phase, creating a cyclical pattern.
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Underconsumption Theory attributes business downturns to insufficient consumer demand, driven by factors like low purchasing power and excessive savings.
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Monetary Theory emphasizes the role of monetary policy in influencing business cycles, with inflation leading to tighter monetary policy and potentially causing recessions.
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Exogenous Theories attribute the causes of business cycles to factors external to the economy.
Unemployment
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Unemployment is a significant problem in the Philippines, reflected in Filipinos working abroad and migrating to Middle Eastern countries for employment.
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The unemployment rate in the Philippines is the percentage of unemployed individuals in the labor force.
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The labor force in the Philippines includes all persons aged 15 years and over who contribute to the production of goods and services, whether employed or unemployed.
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There are different types of unemployment:
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Cyclical Unemployment occurs during economic downturns due to decreased demand for labor.
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Frictional Unemployment results from temporary disruptions in the labor market, such as job transitions or seasonal changes.
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Structural Unemployment arises from mismatches between the skills and qualifications of workers and the requirements of available jobs, often due to changes in technology or industry shifts.
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Seasonal Unemployment is temporary and tied to specific seasons, such as agricultural work or holiday employment.
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Inflation
- Inflation is a sustained increase in the general price level of goods and services in an economy.
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